Broker's call: TCS (Buy)

| Updated on October 13, 2021

Geojit Services

TCS (Buy)

Target: ₹4,298

CMP: ₹3,656.05

Tata Consultancy Services, a division of Tata Sons Limited, is a global IT services organisation that provides a comprehensive range of IT services to its clients in diverse industries. The company caters to finance and banking, insurance, telecommunication, transportation, retail, manufacturing, pharmaceutical, and utility industries.

Q2-FY22 revenue rose 16.8 per cent y-o-y (+3.2 per cent q-o-q, +15.5 per cent y-o-y on constant currency (CC) basis), led by double digit growth across all divisions. EBITDA margin contracted 70 bps to 28 per cent owing to high cost of sales and operating costs. Adj. PAT surged 10.7 per cent y-o-y on higher other income.

Company plans to hire over 40,000 freshers during FY22, anticipating strong demand in coming quarters. Strong TCV, new deals acquisition, robust growth across segments will continue to drive performance in coming quarters, for which the hiring cycle has also picked up pace. Company’s long-term outlook remains promising on the back of strong order book, new deal wins and strong execution capabilities. Strong growth momentum in core business verticals is likely to continue with strong order booking in BFSI, Retail, and CPG.

We reiterate our Buy rating on the stock with a revised target price of ₹4,298 based on 36x FY23E adj. EPS.

Published on October 13, 2021

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