Buy TCS; target of Rs 2470: Angel Broking

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26 Aug, 2025 12:21

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Angel Broking's report on Tata Consultancy Services (TCS)

"TCS expects EBIT margins to decline by ~40-50bp qoq largely due to ongoing investments to enter newer geographies and services lines. The company maintained that margins may stabilize in the 27%-28% band in the long term. Other income during 4QFY2014 is likely to be flattish as USD/INR rate remains largely unchanged during the quarter. Given the volatility in recent quarters, the company may evaluate a change in accounting norms for forex gains/losses."

Outlook and Valuations: "We expect TCS to outperform the industry on the revenue growth front due to its superior market reach and excellent execution capabilities. Management commentary on demand trends for FY2015 continued to be reassuring led by a favorable demand environment and market share gains. We expect TCS to grow its USD revenues at a CAGR of 16.5% over FY2013-15 and EPS at a CAGR of 25% during this period. TCS has executed well over the past many quarters and currently trades at 18.5x FY2015E EPS. We believe TCS’ premium multiples are well deserved given consistency in performance and leadership in growth/profitability. We maintain our Buy rating on the stock with a target price of Rs 2,470", says Angel Broking research report.

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