Buy Tata Consultancy Services; target of Rs 5230: Sharekhan

Sharekhan's research report on Tata Consultancy Services

Reported revenues stood at $7,670 million, up 0.9% q-o-q in constant currency (CC) terms, a tad below our estimate of 1% q-o-q in CC terms. EBIT margin fell by ~60 bps q-o-q to 24.7%, missing our estimate of 24.9%. Total order book TCV stood at $8.6 billion, up 4% q-o-q/down 23% y-o-y. Book-to-Bill ratio stood at 1.1x. With the US Fed’s rate cuts easing cycle and stable macros, growth recovery narrative remains strong for the IT sector and TCS for H2FY25 and FY26.

Outlook

We maintain Buy with an unchanged PT of Rs. 5,230. At CMP, the stock trades at 30.5/26.6/24.5x FY25/26/27E EPS.