Sharekhan's research report on Tata Consultancy Services
TCS reported a revenue growth of 0.6% q-o-q and 10.7% y-o-y in CC terms missing our estimates of 1.1% q-o-q CC growth in a seasonally weak quarter primarily due to weakness in North America. EBIT margin at 24.5% remained flat missing estimates on muted revenue and higher onsite costs offsetting the effect of currency tailwinds during the quarter. The company reported robust deal TCV wins with order book TCV of $10 billion versus $7.8 billion in Q3FY23 and a book to bill ratio of 1.4x recording all-time high number of large deals. The management expressed that they are seeing weakness not only in BFSI but also across other sectors in North America. Despite the strong deal wins and robust deal pipeline, which offers decent revenue visibility the management highlighted that they are being watchful over the next quarter on account of near term uncertaintes due to recent macro developments.
Outlook
We believe near-term outperformance would be restricted for TCS owing to uncertain earnings outlook, CEO transition and global macro headwinds. Thus, we advise investors to adopt a staggered buying approach for long-term investment. We maintain our Buy rating on TCS with an unchanged PT of Rs. 3,650.
For all recommendations report, 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.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
