Neutral rating on TCS with target of ₹3,400 recommended by Motilal Oswal

A revenue growth of 2.4% QoQ CC in 1QFY22 was reported by the Tata Consultancy Services.

Below the estimate of 3.6% made by Motilal Oswal, A revenue growth of 2.4% QoQ CC in 1QFY22 was reported by the Tata Consultancy Services, as per a research report on TCS by Motilal Oswal, according to a report released by Moneycontrol. On account of the second coronavirus wave, this was primarily due to sharp degrowth in its India business that is -14.1% QoQ.

Crore business growth of around 4.1% QoQ CC was broadly in line, excluding the impact in the regional markets. Primarily due to a hike in the annual wage, a decline in the EBIT margin at 25.5% was seen.

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Despite the absence of any mega-deals, with a book to build ratio of around 1.3x, another quarter of strong deal wins was being delivered by the Tata Consultancy Services while without any support from USD500m+ deals, a book to bill ratio above 1.0x was consistently been reported by the Tata Consultancy Services. As it shall improve growth visibility, this has been seen as positive for the company by Motilal Oswal, as per their report.

Along with its ability to capture outsized market share, continued strength in the tech spending environment is indicated by the Tata Consultancy Services through its consistent performance post the initial phase of the coronavirus pandemic.

A positive outlook for peers has also been implied by the management commentary on enterprise demand, cloud.