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Anand Rathi
TCS (Buy)
Target: ₹3,610
CMP: ₹3218.95
Tata Consultancy Services has reported consolidated revenues of ₹43,705 crore in Q4FY21, up by 9.4 per cent year-over-year and 4.1 per cent quarter-on-quarter led by strong growth across all verticals and geographies. This healthy growth in the top-line is also supported by the strong demand in core transformation services and strong revenue conversion from earlier deals.
Strong recovery from TCS, post the initial phases of the Covid-19 pandemic, indicates continued strength in the tech spending environment, along with its ability to capture outsized market share. The management commentary on enterprise demand, especially on Cloud, implies a positive outlook for the firm.
It also highlighted a robust pipeline, with a mix of small/mid-sized deals along with a few large ones, giving it confidence on client spends.
It is expected that IT companies could be key beneficiaries in this multi-year technology transformation phase and in this current scenario, enterprises are building a cloud-based foundation that could serve as a resilient, secure and scalable digital core. TCS’ investments in building deep expertise on these platforms, in research & development spends and in industry-specific solutions can be a key beneficiary of this secular demand growth in coming years.
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