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Winning deals propels expansion

Tata Consultancy Services (TCS), a subsidiary of Tata Sons Ltd, is a global IT company providing a range of services to industries, such as banking, financial services and insurance (BFSI), telecommunications, transportation, retail,; manufacturing, pharma and utilities.

* In Q2FY25, TCS reported a revenue of Rs. 64,259cr (+8% YoY), driven by strong performance in India (+95% YoY), the UK (+11% YoY) and Asia-Pacific (+11% YoY).

* Revenue from India surged 95% YoY to Rs. 5,708cr, fueled by the rapid scale-up of the BSNL deal. Conversely, revenue from North America fell 1% YoY to Rs. 30,572cr, impacted by client-specific issues and softness in the communication segment.

* EBITDA increased 6% YoY to Rs. 16,731cr, led by lower cost of sales and revenue growth, with margin reaching to 26% (-40bps YoY). Consequently, PAT rose 5% YoY to Rs. 11,955cr.

* TCS’s prospects are expected to receive a significant boost from a strengthened workforce, stabilisation of headwinds, large deal ramp-ups, and a healthy order pipeline

Valuation

Despite challenging macroeconomic conditions and client-specific issues, TCS has demonstrated resilient revenue growth. BFSI growth is anticipated to accelerate, driven by stabilising macroeconomic environment, easing interest rates and robust deal pipeline. The manufacturing segment is expected to benefit from strong demand, while the upcoming holiday season is anticipated to spur growth in the consumer business segment. Lifesciences and healthcare headwinds are expected to stabilise, paving the way for growth in Q4FY25. Therefore, we remain optimistic about the company’s growth prospects and reiterate our Buy rating on the stock ,based on 30x P/E on FY26E Adj. EPS with a revised target price of Rs.4,634

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SEBI Registration Number: INH200000345