Tata's 56-Year-Old IT Giant Signs Multi-Million Dollar Deal: Highest Rs 4,750 Target By Sharekhan On Its Mega

Tata Group-backed mega stock, Tata Consultancy Services (TCS) dived by more than 1.5% on Friday as the broader tone in IT stocks was bearish after Accenture's earnings that showed a gloomy Q4FY24. Apart from this, TCS was in the news for signing a multi-million dollar deal to transform Global IT Infrastructure for Ramboll. Sharekhan has set the highest target on TCS for Rs 4,750.

TCS Share Price:

TCS is the largest IT stock in India in terms of market value. Also, the second largest company after Reliance.

TCS's share price has corrected significantly to Rs 3,913.10 per share, down by 1.53% on BSE after market hours of Friday. Its market cap is at Rs 14,15,793.83 crore. YTD, TCS is up marginally by 3%.

The stock's 52-week high and low are at Rs 4,254.45 and Rs 3,070.30 apiece respectively.

The stock was under pressure in line with selloffs in the IT sector after Accenture cut its guidance for 2024 third quarter and full-year earnings.

TCS Mega Deal:

TCS signed a multimillion-dollar strategic partnership to carry out the end-to-end IT transformation of Ramboll, a global architecture, engineering, and consultancy company headquartered in Denmark.

As per the regulatory filing, TCS will also deliver services to manage Ramboll's cloud and data centers, application development and maintenance, Cyber Security and Digital Workplace. This will set a digital foundation for Ramboll's business growth, help to reduce its climate footprint, and increase scalability.

On the deal, Thomas Angelius, Senior Group Director and chief Information Officer, Ramboll, said, "Our company has experienced remarkable growth, and we are determined to see this success forward. To continue our upward trajectory, we recognized the need for a trustworthy partner who can help us build a standardized, scalable IT platform that allows for innovation, and is agile enough to foster creativity."

Angelius added, "With TCS as our partner, we are confident in our ability to future-proof the business and continue to deliver the excellent services our customers expect."

As part of the deal, TCS will help reduce costs and realize economies of scale within Ramboll's IT estate. This will be achieved by streamlining and consolidating the IT architecture and operations structure. The result will be an agile IT platform that is resilient and can support future transformation.

Further, Ramboll will also get access to the rich contextual knowledge in TCS, innovations and technologies to further strengthen its IT processes. As a part of this strategic partnership, TCS will also induct more than 300 Ramboll IT employees in 12 countries.

V Rajanna, President, Technology, Software and Services, TCS said, "The partnership shall help Ramboll with a scalable, future-ready IT platform driving business agility. TCS will leverage the power of data, cloud, and analytics to help Ramboll drive intelligent business transformation and enterprise-wide growth."

Notably, TCS has been present in Denmark for over 30 years, driving growth and transformation for its clients. TCS has been named a Top Employer in Denmark since 2014 by the Top Employers Institute and is ranked #1 in Customer Satisfaction in the Nordics for 14 consecutive years in an independent survey.

Sharekhan Target Price On TCS:

In its research note, Sharekhan said, "TCS's resilient revenue growth over the last several quarters is expected to pick up, given the ramp-up of large deal wins over FY25/26 in addition to demand recovery across key verticals, including BFSI, led by mitigating headwinds in CY24 and growing opportunities across newer technology services. The ramp-up of JLR, Nest, BSNL and Aviva deals are likely to fuel revenue growth in the medium to long term."

Also, the brokerage highlighted that TCS is witnessing a margin uptick aided by moderating attrition and declining subcon costs. Margin improvement is expected to steadily continue in FY25, aided by revenue growth, further moderation in LTM attrition, subcon cost optimization, and improving utilisation.

Additionally, Sharekhan's note added, "TCS's strong domain expertise, geographical presence, and ability to cross-sell make it well placed to tap into significant opportunities for growth in the tech sector owing to demand recovery along with cost takeouts as well as digital transformation programs and vendor
consolidation in addition to the demand for newer technology services."

On the valuaton, Sharekhan's note added, "we maintain BUY on TCS with revised price target (PT) of Rs. 4,750."

This is the highest target price set on TCS. From the current price level, there is a potential of 21.4% upside ahead.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.