1 week Ago By Moneycontrol
Prabhudas Lilladher's research report on Tata Consultancy Services The revenue growth in Q4 was disappointing, missing our estimates by 90bps QoQ, largely attributed to the ramp down in BSNL deal. Otherwise, the international business grew 0.6% QoQ, curtesy BFSI (+1.
3% QoQ) and other key geographies that sequentially turned positive after a weak growth reported in Q3. The deal TCV at USD12.2bn (+20% QoQ), was impressive with no major change in the mix or nature of the deals.
The management was confident of deriving growth in the international market on the back of strong bookings in H2FY25 and robust playbook in the cost-focused areas. However, we believe the adverse tariff policies and geo-political tension might influence enterprise decisions and scrutinize closure activities, already visible at the fag end of the quarter. On the margins, ramp down of the low-margin BSNL deal and rationalizing employee pyramid are the major levers to pull margins despite the low revenue visibility in FY26E.
We are adjusting our revenue estimates for the quarterly miss while keeping our margins broadly unchanged. Outlook We expect CC revenue to grow at 2.5% and 6.
0% YoY, while expect margins to be reported at 24.7% and 25.1% in FY26E and FY27E.
With lower growth visibility and outlook, we are revising our PE multiple to 26x (28x earlier), translating a TP of 4,160. Maintain BUY. For all recommendations report, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.
com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Tata Consultancy Services - 11042025 - prabhu.
