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Tata Consultancy Services Ltd TCS

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Stock XNSE Rating as of
INR 3,821.35 −30.85 (0.80%)
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As of Delayed Price Closed
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Company Report

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Tata Earnings: Firm Closes out a Solid Year Despite Client Spending on IT Services Remaining Muted

Malik Ahmed Khan

We are raising our fair value estimate for wide-moat Tata Consulting Services to INR 3,050 from INR 2,960 after the firm closed out fiscal 2024 with strong financial results. While customers continue to tighten their fiscal belts during the ongoing period of macrouncertainty, we remain impressed by Tata’s ability to navigate the current macroeconomic environment. Despite our fair value estimate increase and our continued optimism about Tata’s long-term opportunity as a leader in IT services, we view the firm’s shares as overvalued.

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Price vs Fair Value

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TCS is trading at a 27% premium.
Price
INR 3,874.70
Fair Value
INR 4,241.00
Uncertainty
Medium
1-Star Price
INR 9,182.90
5-Star Price
INR 9,285.00
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Tata should benefit from greater margin expansion than expected in our base case as more automated tech solutions decrease the variable costs associated with each incremental sale.

Bears

Tata could suffer greater wage hikes than expected, leading to aggressive margin contraction if automation and mix shift benefits prove to be smaller in scale.

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Trading Information

Previous Close Price
INR 3,852.20
Day Range
INR 3,802.55–3,876.80
52-Week Range
INR 3,156.00–4,254.75
Bid/Ask
INR 3,821.35 / INR 3,823.45
Market Cap
INR 13.83 Tril
Volume/Avg
2.0 Mil / 2.6 Mil

Key Statistics

Price/Earnings (Normalized)
30.12
Price/Sales
5.79
Dividend Yield (Trailing)
1.33%
Dividend Yield (Forward)
1.33%
Total Yield
2.56%

Company Profile

Tata Consultancy Services is a leading global IT services provider, with nearly 450,000 employees. Based in Mumbai, the India IT services firm leverages its offshore outsourcing model to derive half of its revenue from North America. The company offers traditional IT services offerings: consulting, managed services, and cloud infrastructure services as well as business process outsourcing as a service, or BPaaS.
Sector
Technology
Industry
Information Technology Services
Stock Style Box
Large Core
Total Number of Employees
615,721
Website
http://www.tcs.com

Competitors

Valuation

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Metric
TCS
WIT
INFY
Price/Earnings (Normalized)
 30.1220.401,978.28
Price/Book Value
 15.283.416.73
Price/Sales
 5.792.653.80
Price/Cash Flow
 27.5918.1519.27
Price/Earnings
TCS
WIT
INFY

Financial Strength

Metric
TCS
WIT
INFY
Quick Ratio
 2.562.171.68
Current Ratio
 2.712.291.99
Interest Coverage
 70.5312.12—
Quick Ratio
TCS
WIT
INFY

Profitability

Metric
TCS
WIT
INFY
Return on Assets (Normalized)
 —10.15%19.09%
Return on Equity (Normalized)
 —16.30%31.92%
Return on Invested Capital (Normalized)
 —12.16%28.79%
Return on Assets
TCS
WIT
INFY
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