Edelweiss recommended hold rating on Tata Consultancy Services with a target price of Rs 3321 in its research report dated April 19, 2018.
Edelweiss' research report on Tata Consultancy Services
Tata Consultancy Services’ (TCS) Q4FY18 revenue, at USD4,972mn (up 3.9% QoQ, 2.0% CC), came ahead of Street’s 2.8% estimate, while EBIT margin at 25.4%, up 20bps QoQ, was in line. Revenue growth was led by digital business (up 10.2% QoQ/42.8% YoY CC) which contributes 23.8% to revenues. Management commentary was optimistic, anchored by strong growth momentum in retail, energy & utilities and travel & transportation verticals.
Outlook
However, current valuations at 19.2x FY20E EPS offers limited upside. But, we do not see downside to the stock despite high multiple due to sector tailwinds and high cash returns. Maintain ‘HOLD/SP’ with a revised TP of INR3,321 (INR3,250 earlier; 20x FY20E EPS).For all recommendations report, click here
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