Tata Consultancy Services Ltd. (TCS) Stock Recommendation | Score, Valuation, Technicals & Financial Trend

Score

Click here to find our call on this stock

Strong Sell

Sell

Hold

Buy

Strong Buy

Comparison

Company

Score

Quality

Valuation

Financial

Technical

Coforge

Hexaware Tech.

Persistent Syste

Tech Mahindra

Infosys

LTM

L&T Technology

TCS

HCL Technologies

Wipro

Mphasis

Why is Tata Consultancy Services Ltd. ?

Strong Long Term Fundamental Strength with an average Return on Equity (ROE) of 48.29%

Healthy long term growth as Net Sales has grown by an annual rate of 10.00%
The company is Net-Debt Free

Flat results in Jun 26

CASH AND CASH EQUIVALENTS(HY) Lowest at Rs 12,908.00 cr
DEBTORS TURNOVER RATIO(HY) Lowest at 4.63 times

With ROE of 49.1, it has a Fair valuation with a 8.2 Price to Book Value

The stock is trading at a fair value compared to its peers' average historical valuations
Over the past year, while the stock has generated a return of -22.10%, its profits have risen by 9.1% ; the PEG ratio of the company is 1.8

High Institutional Holdings at 22.54%

These investors have better capability and resources to analyse fundamentals of companies than most retail investors.

Consistent Underperformance against the benchmark over the last 3 years

Along with generating -22.10% returns in the last 1 year, the stock has also underperformed BSE500 in each of the last 3 annual periods

With its market cap of Rs 8,79,883 cr, it is the biggest company in the sector and constitutes 25.38% of the entire sector

Its annual Sales of Rs 275,859.00 are 24.69% of the industry

Real-Time Research Report

Verdict Report

How much should you hold?

Overall Portfolio exposure to TCS should be less than 10%
Overall Portfolio exposure to Computers - Software & Consulting should be less than 30%

(If sector exposure > 30%, please use optimiser tool to see which are the best stocks to hold in Computers - Software & Consulting)

When to exit? - We will constantly monitor the company and suggest at the appropriate time to exit from the stock

Is TCS for you?

Medium Risk, Low Return

Absolute

Risk Adjusted

Volatility

TCS

-22.1%

-0.82

26.92%

Sensex

-3.81%

-0.28

13.58%

Quality

Management Risk

Growth

Capital Structure

Quality grade scale :

Below Average, Average, Good, Excellent

Quality key factors

Factor

Value

Sales Growth (5y)

10.00%

EBIT Growth (5y)

8.80%

EBIT to Interest (avg)

67.96

Debt to EBITDA (avg)

0.14

Net Debt to Equity (avg)

-0.33

Sales to Capital Employed (avg)

2.17

Tax Ratio

24.67%

Dividend Payout Ratio

80.92%

Pledged Shares

Institutional Holding

22.54%

ROCE (avg)

101.04%

ROE (avg)

48.29%

Valuation

Valuation Scorecard

Valuation grade scale :

Very Risky, Risky, Very Expensive, Expensive, Fair, Attractive, Very Attractive

Valuation Key Factors

Factor

Value

P/E Ratio

Industry P/E

Price to Book Value

8.20

EV to EBIT

12.30

EV to EBITDA

11.40

EV to Capital Employed

11.75

EV to Sales

3.06

PEG Ratio

1.81

Dividend Yield

3.29%

ROCE (Latest)

93.03%

ROE (Latest)

49.09%

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Technicals

Technical key factors

Indicator

Weekly

Monthly

MACD

Mildly Bullish

Bearish

RSI

No Signal

Bollinger Bands

Bullish

Mildly Bearish

Moving Averages

Mildly Bearish (Daily)

KST

Mildly Bullish

Bearish

Dow Theory

Mildly Bullish

Mildly Bearish

OBV

Mildly Bullish

Bearish

Technical Indicator Scale: Bearish, Mildly Bearish, Sideways, Mildly Bullish, Bullish Turned

Technical Movement

Analyse All Technical Factors

Financial Trend

Financial Trend Scorecard

Financial Trend scale:

Very Negative, Negative, Flat, Positive, Very Positive, Outstanding

7What is working for the Company

OPERATING CF(Y)

Highest at Rs 52,094.00 Cr

NET SALES(Q)

Highest at Rs 72,275.00 cr

PAT(Q)

Highest at Rs 13,848.59 cr.

-2What is not working for the Company

CASH AND CASH EQUIVALENTS(HY)

Lowest at Rs 12,908.00 cr

DEBTORS TURNOVER RATIO(HY)

Lowest at 4.63 times

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Here's what is working for TCS

Operating Cash Flow - Annually

Highest at Rs 52,094.00 Cr and Grown

each year in the last three years

MOJO Watch

The company has generated higher cash revenues from business operations

Operating Cash Flows (Rs Cr)

Net Sales - Quarterly

Highest at Rs 72,275.00 cr and Grown

each quarter in the last five quarters

MOJO Watch

Near term sales trend is very positive

Net Sales (Rs Cr)

Profit After Tax (PAT) - Quarterly

Highest at Rs 13,848.59 cr. and Grown

each quarter in the last five quarters

MOJO Watch

Near term PAT trend is very positive

PAT (Rs Cr)

Here's what is not working for TCS

Cash and Cash Equivalents - Half Yearly

Lowest at Rs 12,908.00 cr

in the last six half yearly periods

MOJO Watch

Short Term liquidity is deteriorating

Cash and Cash Equivalents

Debtors Turnover Ratio- Half Yearly

Lowest at 4.63 times

in the last five half yearly periods

MOJO Watch

Company's pace of settling its Debtors has slowed

Debtors Turnover Ratio