Buy Tata Consultancy Services, target price Rs 4100: Emkay Global

Emkay Global has buy call on Tata Consultancy Services Ltd. with a target price of Rs 4100. The current market price of Tata Consultancy Services is Rs 3825.1.

Time period given by analyst is one year when Tata Consultancy Services Ltd. 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 1412205.34 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.


Financials
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.

Investment Rationale
The brokerage builds in 1.9% QoQ USD revenue growth, factoring in ~80bps cross-currency headwinds. EBIT margin is likely to expand 20bps QoQ due to flattening employee pyramid, higher offshoring, and revenue growth-led operating leverage. Key things to watch out for: 1) CY22 IT budget, 2) demand trends in key verticals such as BFSI, Retail, Manufacturing and Communications, 3) deal intake/pipeline in Q3, 4) pricing environment, 5) margin outlook, 6) supply-side challenges and attrition, 7) regional markets outlook.

Promoter/FII Holdings
Promoters held 72.19 per cent stake in the company as of 30-Sep-2021, while FIIs owned 15.37 per cent, DIIs 7.9 per cent.