Buy Tata Consultancy Services Ltd For Target Rs. 3,800 - ICICI Direct
Follow us Now on Telegram ! Get daily 10 - 12 important updates on Business, Finance and Investment. Join our Telegram Channel
https://t.me/InvestmentGuruIndiacom
Download Telegram App before Joining the Channel
Healthy deal wins a key positive…
About the stock:
Tata Consultancy Services (TCS) is one of the leading IT service providers with a presence in BFSI, Communication, Manufacturing, Retail & Hi Tech.
* Consistent organic revenue growth and industry leading margins (>25%)
* Stable management, robust return ratios (>RoCE 40%) & payouts (~70%)
Q1FY22 Results:
TCS reported Q1FY22 results.
* US$ revenues grew 2.4% QoQ to $6,154million
* EBIT margins declined 133 bps QoQ to 25.5%
* The company’s deal pipeline continues to be healthy at US$8.1 billion
What should investors do?
TCS share price has grown by ~3x over the past five years (from ~| 1200 in July 2016 to ~| 3,257 levels in Jul 2021)
* We continue to remain positive and retain our BUY rating on the stock
Target Price and Valuation:
We value TCS at | 3800 i.e. 30x P/E on FY23E EPS
Key triggers for future price performance:
* TCS is key beneficiary multi-year growth (15-20%) in digital technologies
* Increase in outsourcing in Europe, vendor consolidation and deal pipeline leading to revenue CAGR of 13% over FY21-23E Industry leading margins to continue expect margins to improve 142 bps over FY21-23E
* Double-digit return ratios, strong cash generation and healthy payout
Alternate Stock Idea:
Apart from TCS, in our auto coverage we also like Infosys.
* Improving revenue growth, narrowing margins with industry leader and healthy payout
* BUY with target price of | 1,650
To Read Complete Report & Disclaimer Click Here
https://secure.icicidirect.com/Content/StaticData/Disclaimer.html
Above views are of the author and not of the website kindly read disclaimer
