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In the latest report by Motilal Oswal, Tata Consultancy Services (TCS) has been recommended with a buy rating, setting a target price of Rs 4,660. The report dated July 12, 2024, highlights TCS’s solid performance in the first quarter of FY25, with revenue reaching USD7.5 billion, marking a 1.9% QoQ growth in USD terms. This exceeded the estimated growth and was mainly driven by strong showings in India, the UK, and North America.
TCS reported a total contract value (TCV) of USD8.3 billion, although this was a decrease of 37.1% QoQ and 18.6% YoY. The company’s book-to-bill ratio stood at 1.1x, showcasing a positive outlook for future growth. The banking sector in the US, particularly in the BFSI segment, witnessed a return to growth during the quarter.
Looking ahead, Motilal Oswal has maintained its EPS estimates for FY25/FY26, projecting a USD revenue CAGR of ~6.9% and an INR EPS CAGR of ~10.9%. The target price of INR 4,660 suggests a 30x FY26E EPS, indicating a 19% upside potential and reinforcing the buy rating on TCS shares. The research report reiterates the positive outlook on the stock and encourages investors to consider the growth prospects offered by TCS in the coming years.
