Dolat Capital Market's research report on Tata Consultancy Services
TCS reported revenue growth of 4.2% QoQ in CC terms (DE: 4.3%) led by broad-based growth across verticals. OPM improved by 23bps QoQ to 26.8% (DE:26.5%) led by sustained cost savings in SG&A. Announced Final Dividend of Rs. 15 per share. Signed highest ever TCV of US$9.2bn (BFSI $3.9bn, Retail $1.4bn) taking TTM TCV to $31.5bn implying 1.42x revenue coverage. TCV in Q4 witnessed higher closure of small deals (largest deal was $0.5bn). TCS is confident with its' "qualitative" commentary on cloud adoption led multi-year growth opportunity. Expects high double digit growth in FY22 (led by low base) and potential for double digit growth over next couple of years.
Outlook
While Q4 performance, continued positive stance on transformation, and strong TTM TCV of $31.5Bn provide us comfort for near term, we don't see any meaningful upgrades for our estimates (scaled up by 1-2% over FY22E/FY23E) and maintain Reduce rating on TCS with TP of Rs3,370 valued at 30xFY23E earnings (3x on PEG basis).
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