Trading 20% Down From 52-Week High, Tata Group Stock Gets Add Call: Kotak Securities

Tata Group stock, Tata Consultancy Services Ltd, has received add call from Kotak Securities. The analyst has maintained call to add TCS with a target price of Rs 3450 apiece. The stock has given multibagger returns to investors and has a market capitalisation of Rs 11,86,593.77 crore. Check key takeaways below:

1. TCS Stock Performance & Return

The last trading price of the stock is Rs 3242 apiece with an intraday gain of 1.29%. The stock's 52-week high is Rs 4045 apiece and 52-week low is Rs 2926 apiece, respectively. The stock has given multibagger returns to investors.

In last 5-years, the stock has given 151% return and in last 3-years, the shares have rallied 46%. The stock has declined a little over 8%. The stock has jumped 7%.

2. Moving To Complex Cloud Migrations; TCS Enjoys Advantage

Future cloud migration involves more complex workloads such as mainframes, which need to be re-architected before shift to cloud. This involves extracting business logic out of legacy code and reengineering where TCS has considerable prowess given strong domain expertise, wide portfolio of services and good experience across both legacy and new technologies. TCS' capabilities in legacy modernization are well-recognized by major hyperscalers.

3. Vendor Consolidation Deals To Increase

Velocity of cost take-out deals is stable but can increase given higher focus on cost optimization. Vendor consolidation deals will increase with cost take-out being a key decision-making criterion.

Long-tail vendors or strategic vendors who have under-delivered are vulnerable, latter cases show up more. Vendors with full services capabilities are more preferred.

4. Valuation

According to Kotak Securities, "We expect a slowdown in global IT services growth in CY2023, which will feed into slower growth in FY2024 for Indian IT. TCS will comfortably outpace global IT spending. TCS' business is well-sorted. Its service line revenue mix between discretionary and run-thebusiness (RTB) services mirrors global IT spending. Further, its diversified presence across verticals, geos and ability to drive transformation agenda (on costs as well as business transformation) is impressive. The company is most likely to gain in vendor consolidation exercise. Deeper recession scenarios will lead to higher cost take-out programs where TCS is well-positioned." 

5. About TCS

TCS offers a consulting-led, cognitive-powered, integrated portfolio of business, technology, and engineering services and solutions.

A part of the Tata group, India's largest multinational business group, TCS has over 592,000 of the world's best-trained consultants in 55 countries. The company generated consolidated revenues of US $25.7 billion in the fiscal year ended March 31, 2022, and is listed on the BSE (formerly Bombay Stock Exchange) and the NSE (National Stock Exchange) in India.

Disclaimer

The stock has been picked from the brokerage report of Kotak 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 taking any investment decision.