Morgan Stanley has maintained its “Overweight” rating on Tata Consultancy Services (TCS) with a target price of ₹4,910. With the current market price at ₹4,227.90, this indicates a potential upside of approximately 16.1%.
TCS’s Q2 FY25 results were lower than expectations, with weak revenue growth quality and a miss on margins. However, the company saw some positive developments, including a 1.9% quarter-on-quarter growth in BFSI revenues in USD terms, marking the first year-on-year growth in five quarters in constant currency terms. The net headcount addition for the quarter was 5,700, with a total of 11,200 added in the first half of the fiscal year.
On the downside, revenues outside India declined on a QoQ basis, with India contributing 160 basis points to revenue growth. The order book stood at $8.6 billion, up 3.6% QoQ but down 23.2% YoY, with a book-to-bill ratio of 1.12x in Q2 FY25.
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