Buy TCS; target of Rs 5000: Motilal Oswal

Motilal Oswal's research report on TCS

TCS reported revenue of USD7.5b in 3QFY25, down 1.7% QoQ in USD terms vs. our estimated decline of 0.3%. Growth was driven by India (up 8.2% QoQ/66.3% YoY) and MEA (up 7.7% QoQ), while North America was down 1.5% QoQ. EBIT margins came in line with our estimate at 24.5% (up 40bp QoQ). PAT was up 4.1% QoQ/12.1% YoY at INR124b (below our est. of INR127b). For 9MFY25, revenue/EBIT/PAT increased by 6.2%/7.3%/8.5% compared to 9MFY24. In 4QFY25, we expect revenue/EBIT/PAT to grow by 7.2%/7.2%/9.5% YoY. TCS reported a deal TCV of USD10.2b, up 18.6% QoQ and 25.9% YoY. The book-to-bill ratio was 1.4x.

Outlook

We reiterate our BUY rating on TCS with a TP of INR5,000, implying a 24% potential upside.

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