Oct 18, 2017 03:29 PM IST | Source: Moneycontrol.com

Hold Tata Consultancy; target of Rs 2610: JM Financial

JM Financial recommended hold rating on Tata Consultancy with a target price of Rs 2610 in its research report dated October 13, 2017.

JM Financial's research report on Tata Consultancy

Revenue growth remains lacklustre at TCS and while the management exuded hopes of a directional improvement in macro demand trends – especially in the key retail and BFS verticals – and highlighted a strong deal wins/pipeline in the insurance vertical, visibility on the timelines for the demand turnaround remains low. We believe TCS’ scale is also a growth constraint, more so in an uncertain demand environment. Thus, while a prudent cost management should keep margins in a narrow band, we see limited upside to our 9% EPS growth CAGR over FY18-20 pending a significant demand uptick. As such, we find the stock fairly valued at 17.5x FY19F EPS.

Outlook
Downgrade to HOLD (from BUY); price target revised to INR 2,610 (INR 2,530 earlier).

For all recommendations report, click here

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