TCS Benefits From Accelerating IT Modernization Market in Q4; Increasing FVE to INR 2,000

Wide-moat Tata Consulting Services reported an excellent fourth quarter, beating both our top and bottom line expectations as cloud migration, application modernization and data modernization enterprise activity drove results. TCS refrained from giving any guidance, but we are confident that TCS will be able to achieve double-digit revenue growth in the year ahead while continuing to expand margins, as companies become increasingly comfortable resuming higher-margin IT modernization projects that, for many, were put on hold at the start of the global pandemic. We've elevated expectations for our forecast beyond fiscal 2022 as well, which leads us to increase our fair value estimate for TCS to INR 2,000 from INR 1,880. Even after factoring in significant growth ahead for TCS we still view TCS as overvalued, as the company trades near INR 3,250 upon results.