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Reliance Securities
TCS (Buy)
CMP: ₹2,087.65
Target: ₹2,350
Key takeaways: a) Tata Consulancy Services’ 1QFY20 revenue rose 2.3 per cent q-o-q in CC terms (1.6 per cent in dollar terms), while EBIT margin declined 94 bps q-o-q owing to rupee appreciation and wage hike.
From a vertical perspective, BFSI (+1.3 per cent q-o-q in dollar) and retail (1 per cent) grew at a subdued pace, while commodity (+3.1 per cent), manufacturing (+3.7 per cent), technology (+4 per cent) and life sciences & healthcare (+4.3 per cent) saw healthy growth.
The IT major won $570 crore in TCV in 1QFY20, up >16 per cent y-o-y, implying a book-to-bill ratio of 1.04x (0.97x in 4QFY19).
Digital revenue accounted for 32.2 per cent of TCS’ revenue in 1QFY20 (31 per cent in 4QFY19), up 5.6 per cent q-o-q in dollar terms.
We expect the IT major to clock double digit growth in FY20E.
We have a BUY rating on Tata Consultancy Services with a target price of ₹2,350.
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