'Add' TCS On Large Deal Wins; 'Reduce' Tata Elxsi On Weak Quarter, Says HDFC Securities After Its Q3 Results

TCS’ revenue print stood at $7,539 million, flat QoQ constant currency (in line with 0% QoQ CC estimate); however the YoY trajectory moderated to 4.5% YoY CC and deal bookings were higher at $10.2 billion as compared to $8.6 billion in Q2 comprising North America total contract value at $5.9 billion, BFSI TCV at $3.2 billion and retail and consumer packaged goods TCV at $1.3 billion. .NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..HDFC Securities Institutional Equities.Tata Consultancy Services - Deal momentum picks up Tata Consultancy Services Ltd. delivered in-line revenue growth and operating performance in Q3, albeit with a pick-up in deal wins (best book-to-bill for Q3 and Q4 traditionally being strongest in bookings). Key positives for TCS include-strong total contract value of $10.2 billion, driven by large deal wins across various markets and industries,positive commentary on broad basing of discretionary spend beyond the BFSI vertical, management’s outlook of CY25 growth to be better than CY24 (despite the impact of BSNL deal), supported by increase in successful deployment of GenAI engagements,TCS’ full stack capabilities and growth across managed services, operating model transformation, vendor consolidation, legacy modernization, CX transformation, and GenAI-led transformation, and higher fresher addition next year indicative of better visibility. BSNL deal tapering-off in FY26E will impact growth (improve margins), even as discretionary spend recovers. Our target price of Rs 4,590 is based on 28 times FY27E EPS (five years average at 27x)..Tata Elxsi - Weak Q3 Tata Elxsi Ltd.’s performance was weak, impacted by a sharp deceleration in the Transportation vertical. While the Q3 aggregate revenue performance was similar to Q2, the constituents flipped – deceleration in (high growth) Transportation versus short-term impact of Healthcare weakness earlier. Business challenges in the automotive vertical (particularly Europe) led to the delay in new deal closure and reflected in the decline of tier-1 sub-segment. While Tata Elxsi’s recent deals in APAC region, higher mix of OEM and partnership with Qualcomm will improve the growth trajectory, core geography’s outlook can delay the recovery. FY25E will be the third successive year of revenue growth deceleration of Tata Elxsi and second successive year of profit deceleration. While this trajectory is expected to improve over FY25-27E, its visibility has reduced (as compared to concentrated growth mix in prior period). Maintain Reduce on Tata Elxsi with a lowered target price of Rs 6,190, based on 35x FY27E EPS..Click on the attachment to read the full report:.TCS Q3 Results Review - Mixed Bag; Better CY25 Outlook But Lacks Punch; 'Reduce' Says Dolat Capital.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit. .Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

'Add' TCS On Large Deal Wins; 'Reduce' Tata Elxsi On Weak Quarter, Says HDFC Securities After Its Q3 Results

Tata Consultancy Services delivered in-line revenue growth and operating performance in Q3, albeit with a pick-up in deal wins, adds the brokerage.

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