TCS Q3 Results Review - In A Sweet Spot To Maneuver Macros: IDBI Capital

IDBI Capital Report

Tata Consultancy Services Ltd. reported healthy set of numbers despite a seasonally weak quarter. We expect the impact of macro’s will be felt post two quarters. However, we expect macro impact to be varying across regions with U.S. and UK better placed than Europe.

We believe TCS is well poised to maneuver through the macro challenges due to scale, taking advantage of vendor consolidation and cost take out opportunities.

Hence, post factoring lower growth in FY24E (7.6% YoY) we now expect revenues to grow at a compound annual growth rate of 9% over FY22-FY25E.

In addition, we expect margins to improve in coming quarters and expect margins to surpass 26% in FY25E. We have rolled forward our numbers to FY25E.

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