Comments
Narnolia Financial
TCS (Neutral)
CMP: ₹2,110.05
Target: ₹1,994
TCS exited the year with returning back to its double digit growth performance. Revenue in FY19 grew 11.4 per cent y-o-y mainly driven by strong order book and broad-based growth across verticals. Even margin expanded 80 bps to 25.6 per cent for the year mainly benefited by currency and better operational efficiencies.
Going forward we expect TCS to post continued revenue growth mainly on account of robust growth in TCV (total contract value) which now stands at $21.9 billion ( highest among peers) and continued traction in digital business(31 per cent of overall revenue). However, with early sign of potential macro changes around the corner, we expect the revenue growth momentum to be slower as compared to FY19. Even some challenges in capital market and within the large US clients will put some pressure on BFSI (banking, financial services and insurance) vertical (major contributor to TCS revenue) going ahead. However, some growth is expected to be seen from retail vertical in FY20 after a slow growth in 4QFY19 as the company is seeing strong investment done by players in the market.
Amid some potential macro concern and supply issue we reduced our FY20 revenue growth by 2 per cent and cut the margin by 50 bps. Thus we are Neutral on the stock with a target price of ₹1,994.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.