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IDBI Capital Report
Tata Consultancy Services Ltd.'s Q3 FY24 numbers were above consensus estimates. While the macro is uncertain, TCS continues to win cost optimization, vendor consolidation and growth and transformation deal.
The company is also expecting improvement in banking, financial services and insurance.
Apart from BFSI, energy and utilities, lifescience and retail are witnessing strong tailwind. In addition we believe that with receding macro headwinds and robust deal wins, the company could see tailwinds in revenue and margins.
This coupled with company’s focus on technologies like 5G, IoT, generative AI, virtual reality /metaverse, digital twin will drive long term growth.
However, considering the recent run up in price we maintain 'Hold' rating on the stock.
We have introduced FY26E estimates and now value the company at 25 times FY26E earnings per share leading to target price of Rs 4,000.
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