On Friday, Jefferies maintained its Buy rating on Tata Consultancy Services Ltd. (NS:TCS:IN), albeit with a slight reduction in the price target from INR4,775.00 to INR4,760.00. The adjustment follows the company's third-quarter results, which matched analyst estimates and featured positive management commentary.
Tata Consultancy Services reported earnings that aligned with projections, prompting Jefferies to reaffirm its earnings forecasts for the technology firm. The research firm anticipates a 9% compound annual growth rate (CAGR) in TCS's earnings per share (EPS) over the fiscal years 2025 to 2027. This outlook is bolstered by the management's remarks indicating a resurgence in discretionary spending, particularly in the North America Banking, Financial Services, and Insurance (BFSI) sector, along with a robust order book.
Jefferies highlighted that the wind-down of the Bharat Sanchar Nigam Limited (BSNL) deal might present opportunities for margin improvement. This potential for increased profitability contributes to the firm's confidence in maintaining a positive outlook on TCS shares.
The research firm also finds the valuation of TCS stock appealing at 27 times price-to-earnings (PE), believing it adequately reflects the short-term growth challenges the company may face. Despite the minor adjustment, Jefferies' stance on the stock remains unchanged, signaling continued optimism in TCS's market performance.
The slight adjustment in the price target to INR4,760 represents a nuanced calibration of expectations, taking into account the company's current financial health and market prospects. Jefferies' analysis suggests that TCS is well-positioned to navigate the anticipated growth headwinds while offering an attractive investment proposition at its current valuation.
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