Sharekhan’s research report on Tata Consultancy Services
Q1FY2022 headline numbers slightly missed estimates; but TCS saw healthy deal TCVs, broad-based growth across core verticals, growth in major markets, client additions across bands and higher cash conversion. Management remains confident on reporting sustainable margins in FY2022E, aided by strong revenue growth and operational efficiencies, despite a rise in discretionary expenses. It is well-placed to capture growth and transformation opportunities. USD revenue and earnings to clock a 13%/16% CAGR over FY2021-23E; we continue to prefer TCS on account of its full-service business model, best-in class execution, consistent mega-deal wins and higher payouts.
Outlook
We maintain a Buy on TCS with an unchanged PT of Rs. 3,750, given a strong revenue growth potential, resilient margin performance and strong competencies across technologies and domains.
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