Axis Securities initiates coverage on Tata Consultancy Services with a ‘BUY’ recommendation and a Target Price (TP) of ₹4,200/share, implying an upside of 14% from the CMP. The stock is currently trading at ₹3661.
TCS: Axis securities initiated a 'buy' call with a target price of ₹4200
TL;DR.
In the past one year, the stock of TCS has surged 17.93 per cent as compared to a 22 per cent rise in the S&P BSE Sensex.
TCS has ended the financial year with ₹9,926 crore net profit and ₹50,591 crore in revenue. The net profit registered a 7.4% rise on a year-on-year basis, while the revenue rose 15.8% YoY.
For the full fiscal year, TCS' operating margin rose 25.3%, while its net income grew 14.8% YoY to ₹38,327 crore. The revenue for the full fiscal year stood at ₹191,754 crore, up 16.8%.
TCS also recorded the highest ever order book of $11.3 billion in Q4, and it was $34.6 billion for the full fiscal year.
TCS added 10 clients in the $100 million+ category, 19 in the $15 million+ category, 40 in the $20 million+ category and 52 in the $10 million category.
North America remains the top market for TCS at 18.7% growth in Q4 FY22, followed by the UK and Continental Europe at 13% and 10.1% growth, respectively.
| Revenue Distribution by Industry Domain | Q1 FY22 | Q2 FY22 | Q3 FY22 | Q4 FY22 |
| BFSI | 32.5% | 32.4% | 32.1% | 31.9% |
| Retail & CPG | 14.8% | 15.0% | 15.1% | 15.4% |
| Communication & Media | 6.4% | 10.0% | 9.9% | 6.7% |
| Manufacturing | 9.8% | 9.9% | 9.9% | 10.% |
| Life Science & Healthcare | 10.2% | 8.8% | 8.7% | 10.0% |
| Technology & Services | 8.6% | 6.5% | 6.5% | 8.7% |
| Regional Markets & Others | 17.7% | 17.4% | 17.8% | 17.3% |
| Total | 100.0% | 100.0% | 100.0% | 100.0% |
| Source: Axis Securities |
TCS delivered encouraging growth in the majority of the verticals during the quarter. Life Sciences & Healthcare grew by 16.4% YoY, BFSI by 12.9% YoY, Manufacturing by 19% YoY, and Technological Services by 18% YoY.
Furthermore, Communication & Media grew by 18.7% YoY and Regional Markets & Others, too, improved by 4% YoY.
Moving forward, a positive growth trend is expected to continue, supported by strong traction and a robust deal pipeline in the forthcoming quarters, the report added.
Stock Performance
In the past one year, the stock of TCS has surged 17.93 per cent as compared to a 22 per cent rise in the S&P BSE Sensex, Moreover, in the past 3 years, it has rallied 81 percent.
Stock movement of TCS
Further, over the past five years, the market price of TCS has zoomed 214 per cent, as compared to a 105 per cent surge in the Sensex.
Outlook
From a long-term perspective, Axis Securities believe TCS will build a resilient business model by securing multiple long-term contracts with the world’s leading brands. With an encouraging growth in volumes and efficient execution, the company is expected to regain its operating margins at the desired level of 26%-27%. However, probable delays in the ramp-up in the won deals remain a key risk to the company’s operating performance, it added.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.
Earnings Revision
First Published: 14 Apr 2022, 07:53 AM IST
