TCS stock analysis and expert insights in detail

Stock overview

Ticker	TCS
Sector	Information Technology
Market Cap	₹ 13,06,500 Cr
CMP (Current Market Price)	₹ 3,589
52-Week High/Low	₹ 4,592/ ₹ 3,457
P/E Ratio	26.8 x
Beta	0.9 (Low volatility)

About TCS

Founded in 1968, TCS is a pioneer in the Indian IT sector and part of the Tata Group. It offers consulting, business solutions, and IT services globally, with a strong presence across North America, Europe, and Asia. 

The company’s focus on innovation, digital transformation, and client-centric strategies has cemented its position as a market leader. TCS caters to a vast and varied customer base. 

Let’s do a deep dive into the company’s financial performance and understand what makes it a must have portfolio stock for all the investors.

Primary growth factors for TCS

1. Digital transformation boom

• Strong demand for cloud services, AI, and cybersecurity.
• TCS’s partnerships with AWS, Microsoft, and Google strengthen its market position.

2. Global client base
   • 60+ clients contribute over $100 million in annual revenue.
   • Long-term contracts with Fortune 500 companies provide stable cash flows.
   • Here’s a breakdown of clients contribution basis the revenue generated from those clients : 

3. Diversified portfolio with moderate growth across Major segments
   • TCS revenue portfolio is well diversified across BFSI, Consumer Business, Lifesciences, Healthcare and Manufacturing.
   • All the verticals are growing at a moderate pace except Healthcare, hence there is lower dependency across any major vertical.
   • Here’s a breakdown of revenue contribution and growth across all the business verticals : 

Domain/Vertical	Business Contribution	YoY Growth
BFSI	31%	0.9%
Consumer Business	15%	1.1%
Life Sciences and Healthcare	10%	-4.3%
Manufacturing	8%	0.4%
Technology and Services	8%	0.4%
Media and Communication	6%	-10.6%
Energy, Resources and Utilities	6%	3.4%
Others	16%	41.0%
Total	100%	4.5%

4. Diversified geographical sales mix
   • TCS’s revenue portfolio is well diversified across major geographies such as America, Europe, Asia Pacific, etc.
   • Here’s a breakdown of revenue contribution across all the business geographies

5. Cost optimisation & automation
   • Investments in automation tools like Ignio enhance service delivery and reduce costs.
6. Strong talent pool
   • A workforce of over 600,000 employees, with ongoing upskilling initiatives in emerging tech.

Q3 FY25 Financial Performance

Metric	Q3 FY 25	YoY Growth
Revenue	63,973 cr	5.6%
Operating Income	15,657 cr	3.3%
Profit	12,380 cr	5.5%
Net Margin	19,4%	0 bps

• TCS reported an impressive 5.6% growth in Revenue and 5.5% increase in Profit in Q3 FY 25.
• The IT giant reported similar margins to Last year at 19.4%. 
• Despite macroeconomic uncertainties, TCS has delivered consistent revenue growth and healthy margins, reinforcing its operational efficiency.
• Here’s the revenue and profitability trend for TCS on a quarterly basis : 

Detailed competition analysis for TCS

Company	Market Cap	Profit	P/E	RoCE
TCS	13,06,500 cr	₹ 12,380 cr	26.8x	64.3%
Infosys	7,00,100 cr	₹ 6.806 cr	25.3x	40.0%
HCL Tech	4,22,700 cr	₹ 4,591 cr	24.8x	29.6%
Wipro	2,98,200 cr	₹ 3,353 cr	24.1x	16.9%
Tech Mahindra	1,46,100 cr	₹ 983 cr	39.0x	11.9%

• While TCS trades at a premium valuation, its industry-leading margins and superior return ratios justify the higher multiple.

Company valuation insights: TCS

As per Discounted Cash Flow analysis:

It estimates the intrinsic value of TCS share based on expected future cash flows:

• Intrinsic Value Estimate: ₹4,100 per share
• Upside Potential: 14%
• WACC: 10%
• Terminal Growth Rate: 3%

Given its robust fundamentals and growth visibility, TCS remains an attractive long-term bet, though short-term upside may be limited.

Major risk factors affecting TCS

1. Global Slowdown Risk:A global economic slowdown could impact client budgets and delay new deals.
2. Currency Fluctuations: A stronger rupee against the USD could dent revenue, given TCS’s high exposure to North America.
3. Talent Retention & Wage Inflation: High attrition or rising wages could pressure margins, though TCS’s employee engagement initiatives mitigate this risk.

Technical analysis of TCS share

• Resistance: ₹3,750
• Support: ₹3,500
• Momentum: Bullish 
• RSI (Relative Strength Index): 58 (Neutral to Bullish)
• MACD (Moving Average Convergence Divergence): Positive crossover, indicating upward momentum
• 50-Day Moving Average: ₹3,550 (acting as near-term support)
• 200-Day Moving Average: ₹3,400 (long-term support)

TCS is in a steady uptrend, with indicators suggesting further upside, especially on dips toward support levels.

TCS stock recommendation by Ketan Mittal

Current Stance: BUY with a 12-month target of ₹4,100.

Outlook: Positive, with steady upside potential

Recommended Action: Hold or accumulate on dips

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Conclusion

TCS remains a cornerstone of stability and innovation within the Indian IT sector. Its strong financials, global reach, and digital transformation expertise make it a compelling long-term investment. While valuations are on the higher side, the company’s growth potential and market leadership justify the premium.