TCS Q1 Results Review - Growth On Way With Macro A Key Factor For Rebound: IDBI Capital

IDBI Capital Report

Tata Consultancy Services Ltd.'s Q1 FY25 numbers were in-line with consensus estimates. While the macro still seems to be uncertain in the near term, TCS continues to win cost optimization, vendor consolidation and growth and transformation deals.

The company has also won mega deals in banking, financial services and insurance ($ 2.1 billion), consumer business ($1.1 billion) and region wise; North America ($4.6 billion).

TCS’ order book at $8.3 billion saw a decline due to delayed deal conversion for this quarter (1.1 times books to bill versus 1.8 times previous quarter).

It is expected to ramp up in Q2 FY25 which would help in the topline to improve. Improvement in BFSI, traction in Gen AI ($1.5 billion pipeline), Cloud modernization, ERP modernisation will lead to tailwind in revenue and margins.

Hence, we have revised our EPS estimates to Rs 142 and 160 (versus 145 and 166) for FY25E and FY26E respectively. This has prompted us to maintain target price at Rs 4,300 and we maintain Hold rating on the stock.

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