ADD This Multibagger Tata Group Stock, Share Can Surge 16%: HDFC Securities

HDFC Securities, a leading brokerage firm, recently hosted its 6th IT Sector Investor Conference, where Tata Consultancy Services (TCS) Ltd. was represented by Kedar Shirali (Global Head Investor Relations). The brokerage has given TCS an "Add" rating with a target price of Rs 3,620 apiece. Considering the estimated target price by the brokerage and the current market price, the shares of the company can surge by 16%.

TCS is a large cap IT Software Sector Tata Group company having a market cap of Rs 11,41,770 crore.

Stock Outlook & Returns

The current market price of the stock is Rs 3,120.40 apiece. The 52 week low of the stock is Rs 2,953 and the 52-week high is Rs 4,043, respectively. It has given a negative return of 8.27% in the past 1 month, and 19.7% negative return over a year, respectively. Whereas, in the past 3 years, it gave 45.68% positive return. In the past 5 years, it gave a multibagger return of 150.94%.

 

Key takeaways

Below are the key highlights of the conference:

• Deal pipeline remains strong, but pipeline replenishment beyond Q2 will be key.
• Deal signings have good momentum in Q2.
• Demand trends are more visible across geographies as compared to by verticals; Europe (both UK & Europe) is looking more vulnerable in certain verticals as compared to NorthAm.
• Manufacturing vertical within Europe is looking relatively vulnerable.
• There's strong momentum in BFSI across geographies core geographies.
• EBITM exit target of 25% for Q4FY23 remains intact.
• Currently, the focus is not to rationalize sub-contractors but over medium term it's a margin lever for the company.
• Normalisation of travel and easing of supply shortage will reduce the subcontractor impact.

HDFC Securities view

TCS' gold standard in execution/scale will be supported by full-stack services portfolio, including industry platforms, dominance in BFSI vertical, and strong global tiering with leading cloud platforms. "We have factored in USD revenue growth of +9.9%/10.1% and EBIT margin at 24.2/24.9% each for FY23/24E. Valuation is 28.5/25.1x (FY23/24E). Our target price of INR 3,620 is based on 28x FY24E EPS with EPS CAGR of 11% over FY22-24E (vs. 5Y average of 25x and 8% EPS CAGR), and is supported by FCF/payout yield of 4/3%; maintain ADD on TCS," the brokerage has said.

 

Disclaimer

The stock has been picked from the brokerage report of HDFC Securities. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before making any investment decision.