Accumulate Tata Consultancy Services; target of Rs 4360: Prabhudas Lilladher

Prabhudas Lilladher's research report on Tata Consultancy Services

TCS reported revenue of USD7.4b, up +1.1% QoQ in CC and reported terms, below consensus of +1.4% QoQ. The growth was partly aided by ramp up of BSNL deal, otherwise key vertical (BFSI flat QoQ) and geography (NA flat QoQ) remained muted in Q4. Despite the softness in revenue, the company recorded highest-ever deal TCV of USD13.2b (+32% YoY) in Q4 partly aided by mega deal (Aviva Insurance) and other notable large wins. With strong exit on NN wins, the overall FY24 deal TCV looks attractive at USD42.7b (+25% YoY) with healthy BTB of 1.5x. Despite having strong deal momentum in FY24, the revenue growth remained weak (up 3.4% YoY CC).

Outlook

The stock is currently trading at 25x FY26e, we are assigning P/E of 27x to FY26e with a target price of INR 4,360. With that I assume coverage on TCS with an “ACCUMULATE” rating.

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Tata Consultancy Services - 15042024 - prabhu