TCS Q3 Results Review - Motilal Oswal Reiterates 'Buy' Rating On The Stock, Sees 24% Upside; Here's Why

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Motilal Oswal Report

Tata Consultancy Services Ltd. reported revenue of $7.5 billion in Q3 FY25, down 1.7% QoQ in USD terms versus our estimated decline of 0.3%. Growth was driven by India (up 8.2% QoQ/66.3% YoY) and Middle East, Africa (up 7.7% QoQ), while North America was down 1.5% QoQ. Ebit margins came in line with our estimate at 24.5% (up 40 basis points QoQ).

Profit after tax was up 4.1% QoQ/12.1% YoY at Rs 124 billion (below our estimate: of Rs 127 billion).

For nine months FY25, revenue/Ebit/PAT increased by 6.2%/7.3%/8.5% compared to 9MFY24. In Q4 FY25, we expect revenue/Ebit/PAT to grow by 7.2%/7.2%/9.5% YoY.

TCS reported a deal total contract value of $10.2 billion, up 18.6% QoQ and 25.9% YoY. The book-to-bill ratio was 1.4 times.

We reiterate our Buy rating on TCS with a target price of Rs 5,000, implying a 24% potential upside.

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