Hold TCS; target of Rs 2450: Religare

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26 Aug, 2025 12:21

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Reliagare's research report on TCSTCS’s Q3FY16 revenues missed estimates as CC growth came in at 0.5% QoQ (+1.2% estimated) with a 0.4% QoQ growth in volumes. US$ revenues declined 0.3% QoQ and we note YoY growth has now slowed down to 5.5%. Amid sluggish growth, margins contracted 48bps QoQ to 26.6% (RCMLe: 26.6%) despite INR depreciation. We think the earnings miss and slowing growth will continue to weigh on TCS’s valuations. We cut our FY17E/FY18E EPS by 2-4% to factor in the growth moderation. HOLD; Mar’17 TP Rs 2,450.Overall, Q3FY16 was a disappointing quarter from TCS given the already low expectations. TCS continues to indicate weakness in Diligenta, and decelearation in overall YoY growth rates to mid-single digits will put pressure on earnings estimates and valuations. We expect mutliples for the company to converge with larger peers as its growth rate moderates, and thus cut our target multiple from 19x to 17x (in-line with INFO’s). Maintain HOLD with a Mar’17 TP of Rs 2,450 (rolled over from a Sep’16 of Rs 2,650 earlier).For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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