Accumulate Tata Consultancy Services; target of Rs 2080: Prabhudas Lilladher
Prabhudas Lilladher’s research report on Tata Consultancy Services
TCS delivered a strong set of performance for 1QFY19 with a beat on constant currency revenues, steady EBIT margins and PAT beat. However, USD revenues missed our estimates owing to strong headwinds from cross currency movements (~USD250bps for the quarter), Revenues at USD5051mn were up 1.6% QoQ and 10% YoY and below our estimates (PLe: USD5071mn). Constant currency growth for the stood at 4.1% and above our estimates (Ple: 3.5%).
TCS stock trades at 23x one year forward EPS (vs 19.3x traded four months ago). TCS trades at 22.2x FY20E EPS. TCS now trades at 5% premium to Accenture. Upgrades TP by 4% to Rs2080/sh (24x FY20E EPS) led by EPS upgrade. Retain Accumulate.
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