1
Please refer to important disclosures at the end of this report
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1
Tata Consultancy Services (TCS) is Asia's largest IT services provider and is
amongst the top 10 technology firms in the world. The management refrained
from giving any guidance for FY2018, however it expects a bounce back of the
key verticals like BFSI, Communications and Hi-Tech. Digital also continues to
see a good traction. On EBIT front, the company expects to manage its margins
in 26-28% range. We expect the company to post a US$ revenue CAGR of 8.5%
over FY2017-19E. Despite the near term, uncertainty arising out of Brexit and
new macro dynamics in US, TCS remains optimist to make a comeback after
current cyclical headwinds are behind. Long term drivers of tech spending will
remain intact and new growth areas are emerging. Thus, the company has
invested well in Digital to reap the benefits over long term. Over FY2017-19E,
we expect TCS to post revenue CAGR of 8.5% in USD and INR terms. On the
EBIT and PAT fronts, we expect the company to post 8.7% and 7.8% CAGR over
FY2017-19E, respectively. The company has reduced debt and is virtually debt
free. The company has a good return on equity (ROE) of 41.09% for the last 3
years. The company has been reporting healthy cash flow from operation of
above `14,000cr for the last 3 years. The company has been maintaining a
healthy dividend payout of 47.9% (Div yield: 1.5%). Hence Buy.
BUY
CMP `2,579
52 Week High / Low
2740/2055
Avg. Daily Volume
1,04,431
IT
Market Cap (` cr)
5,08,232
1
BSE Sensex
31,028
Nifty
9,595
Face Value (`)
Reuters Code
TCS.BO
0.5
Vaibhav Agrawal
022 3935 7800 Ext: 6808
[email protected]gelbroking.com
Tata Consultancy Services
Others | IT
May 29, 2017
2
Tata Consultancy Services | IT
May 29, 2017
2
Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com
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Disclosure of Interest Statement Tata Consultancy Services
1. Financial interest of research analyst or Angel or his Associate or his relative No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives No
3. Served as an officer, director or employee of the company covered under Research No
4. Broking relationship with company covered under Research No
Ratings (Based on expected returns Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)
over 12 months investment period): Reduce (-5% to -15%) Sell (< -15)