Emkay Global Financial is Buying Tata Consultancy Services with Target Price of Rs 4150

Emkay Global Financial is Buying Tata Consultancy Services with Target Price of Rs 4150

We tweak our FY22/23/24 EPS estimates by -1.5%/0.5%/0.2% after factoring in the Q3 performance and buyback. We maintain Buy with a TP of Rs 4,150 (Rs4,100 earlier) at 30x Dec’23E EPS, considering steady deal wins and consistent execution. At 17:30 Tata Consultancy Services was quoting at Rs 3,897.65, up Rs 40.40, or 1.05 percent. It has touched an intraday high of Rs 3,944.40 and an intraday low of Rs 3,857.25. It was trading with volumes of 368,315 shares, compared to its thirty day average of 103,347 shares, an increase of 256.39 percent. In the previous trading session, the share closed down 1.50 percent or Rs 58.55 at Rs 3,857.25. The share touched its 52-week high Rs 3,990.00 and 52-week low Rs 2,701.00 on 08 October, 2021 and 24 February, 2021, respectively. Currently, it is trading 2.31 percent below its 52-week high and 44.3 percent above its 52-week low. Market capitalisation stands at Rs 1,441,760.76 crore.

In its research report dated January 13, 2022, Emkay Global Financial suggested a buy rating on Tata Consultancy Services with a target price of Rs 4150. Revenue in Q3FY22 exceeded our expectations, however EBITM fell short of our expectations. In CC terms, revenue increased by 3.9 percent /15.4% QoQ/YoY. Due to an increase in compensation costs, higher subcontracting expenses, and discretionary non-manpower costs, EBITM fell by 60 basis points QoQ to 25%. Revenue increase was widespread, with double-digit CC growth in all verticals year over year. Retail & CPG (20.4 percent CC YoY), Manufacturing (18.3 percent), BFSI (17.9%), Technology & Services (17.7%), and Life Sciences & Healthcare (17.7%) were the fastest growing sectors (16.3 percent ). Except for Asia Pacific and MEA, all geographies had double-digit growth year over year.

Emkay Global has buy call on Tata Consultancy Services with a target price of Rs 4150. The current market price of Tata Consultancy Services is Rs 3875. Time period given by analyst is year when Tata Consultancy Services price can reach defined target. Tata Consultancy Services Ltd., incorporated in the year 1995, is a Large Cap company (having a market cap of Rs 1432550.12 Crore) operating in IT Software sector. Tata Consultancy Services Ltd. key Products/Revenue Segments include Consultancy Income and Sale of Equipment & Software Licences for the year ending 31-Mar-2021.

For the quarter ended 30-09-2021, the company reported a Consolidated Total Income of Rs 47978.00 Crore, up 4.00 % from last quarter Total Income of Rs 46132.00 Crore and up 16.88 % from last year same quarter Total Income of Rs 41049.00 Crore. Company reported net profit after tax of Rs 9653.00 Crore in latest quarter. The brokerage tweaks FY22/23/24 EPS estimates by -1.5%/0.5%/0.2% after factoring in the Q3 performance and buyback. It maintains Buy with a TP of Rs4,150 (Rs4,100 earlier) at 30x Dec’23E EPS, considering steady deal wins and consistent execution.

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