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KR Choksey’s research report on Tata Consultancy Services
Tata Consultancy Services (TCS) reported a mixed set of Q4FY24 numbers, with the top-line missing our estimates, while profits came in betterthan-expected. Revenue (+3.5% YoY) was driven by India (+37.9%),UK (+6.2%) and Manufacturing (+9.7%), but still missed our estimates by 1.0%. EBIT (+9.9% YoY) surpassed our estimates by 10.8% on stronger-than-expected execution and lower other expenses; EBIT margins expanded by 151 bps YoY. PAT jumped by 9.3% on lower other expenses and finance costs; PAT margins improved by 109 bps YoY. In Q4FY24, the IT Services attrition rate stood at 12.5%, slightly exceeding our base case estimate of 11.7% by 80 bps but remaining within the management’s comfort range of 11% to 13%.
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Outlook
We apply a 27.0x multiple on FY26E EPS to arrive at a raised Target Price of INR 4,194 per share, with an ACCUMULATE rating.
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Tata Consultancy Services – 17042024 – kr
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Sharekhan’s research report on Tata Consultancy Services
TCS’s resilient revenue profile is likely to see an uptick with the ramp-up of large deals from JLR, Nest, BSNL, and Aviva. Deal win TCV over 9MFY24 is robust at USD29.5 billion. EBIT margin improvement is expected to steadily continue in FY25 aided by revenue growth, automation, pyramid restructuring, optimisation of subcon costs, and increased utilisation. Opportunities arising from the SAP migration cycle, demand improvement in certain industry verticals including BFSI, and gradually receding headwinds should aid growth momentum. Gartner forecasts spending on IT services to grow 8.7% in 2024 from 5.8% growth in 2023.
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Outlook
We maintain BUY on TCS with revised PT of Rs. 4,750 (the increase in PT reflects rollover of valuation multiple to FY26E EPS), as the company’s strong domain expertise, geographical presence, and ability to cross-sell make it well placed to grab opportunities across cost optimisation, digital transformation, and newer technology services. At CMP, the stock trades at 29.1/24.8x its FY25/26E EPS.
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Tata Consultancy Services – 15032024 – khan
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ICICI Securities research report on Tata Consultancy Services
Tata Consultancy Services (TCS) has reported beat on both revenue (despite challenging demand environment) and margin fronts despite headwinds from BSNL deal ramp-up in Q3FY24. Management mentioned that the demand environment remains unchanged with clients still cutting down on discretionary spends and focusing on cost optimisation. However, there were a couple of statements indicating optimism for future demand – 1) TCS is gaining market share in the UK, 2) green shoots in Europe and 3) pent-up demand in some verticals may aid growth as and when client sentiment improves, though the timing of the same is still uncertain. We increase our EPS estimate by 5.5%/1.7% for FY25/26E led by an increase in margin estimates.
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Outlook
We continue to value TCS at 25x on Q5-Q8 EPS of INR 155 to arrive at our revised TP of INR 3,872, with potential 4% upside. Maintain HOLD.
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Tata Consultancy Services – 12012024 – isc
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Sharekhan’s research report on Tata Consultancy Services
Q3 earnings were better than estimates in a seasonally soft quarter with revenues at $7,281 million, up 1.7% y-o-y in constant currency (cc) beating our estimates of $7,224 million driven by Energy Resources and Utilities, Manufacturing, and Life Sciences & Healthcare verticals. EBIT margins improved ~75 bps q-o-q to 25%, beating estimates by ~50 bps led by operational efficiencies and reduction in sub-contractor expenses partially offset by furloughs and higher third-party expenses. Deal win TCVs were stable and broad-based at $8.1 billion, up ~4% y-o-y. Book to bill ratio stood at 1.1x. Management commentary was stable and hopeful of a recovery in FY25 owing to expectations of sector headwinds bottoming out. Management believes there will be positive momentum in BFSI in the next quarter and are some seeing green shoots in Consumer vertical.
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Outlook
We believe TCS is well positioned to grab cost optimisation and transformational opportunities as sector headwinds recede and witness a strong pick-up in growth momentum given its strong domain capabilities , contextual knowledge and strong execution . Hence, we maintain Buy rating on TCS with an unchanged PT of Rs. 4,200. At CMP, the stock trades at 26.4x/23.3x FY25/26E EPS.
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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.
Tata Consultancy Services – 12012024 – khan
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!