TCS - Surprise Change At Top; Smooth Transition Expected: ICICI Direct
The new organisational structure, which is aimed at increasing customer stickiness, is expected to enhance market share gains.
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ICICI Direct Report
Tata Consultancy Services Ltd. informed the stock exchanges that its Chief Executive Officer and Managing Director Rajesh Gopinathan decided to step down from the company to pursue his other interests.
The board has nominated K Krithivasan as CEO designate with effect from March 16, 2023.
Mr Krithivasan, has been with TCS for the last 34 years, currently working as President and Global head of banking, financial services and insurance vertical.
Mr Gopinathan will continue with TCS till September 15, 2023 for a smooth transition and support to his successor.
Key triggers for future price performance:
The new organisation structure, which is aimed at increasing customer stickiness, is expected to enhance market share gains.
Increase in outsourcing in Europe, vendor consolidation and deal pipeline leading to rupee revenue compound annual growth rate of 11.0% over FY22-25E.
We expect margins to improve from FY23 onwards due to utilisation improvement and moderation of sub-contractor costs. We build in margin expansion of 110 basis points over FY23-25E.
Double-digit return ratios, strong cash generation and healthy payout.
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