Arihant Capital has given Accumulate recommendation for Tata Consultancy Services with a target price of Rs. 3663 in its research report issued on Jul 09, 2021
Arihant Capital’s research report on Tata Consultancy Services
TCS has reported Q1FY22 numbers below our estimate. TCS has reported consolidated revenue of INR 45,411 Cr, +18.5% YoY/3.9% QoQ in Q1FY22 against our estimate of INR 45,890 cr. Consolidated EBIT stood at INR 11,588 Cr, up by 28.1% YoY/-1.2% QoQ against our estimate of INR 11,706 Cr. On the margins front, EBIT margin improved by 2552bps YoY/ contracted 133bps QoQ to 25.5% in-line with an estimate but given higher attrition and hiring with a wage hike, and strong growth across all verticals. Consolidated PAT saw a rise of 28.1% YoY/-2.7% QoQ to INR 9,031 Cr against our estimate of INR 9,568 Cr. Constant Currency Revenue growth +21.6% YoY/2.8% QoQ to (Mn USD) 6,154 against our estimate 6,204 (Mn USD).
We value TCS at PE of 30x to its FY23E EPS of INR 122.1, which yields a target price of INR 3,663 per share. We upgrade our rating to Accumulate from Neutral earlier.