TCS Q2 Review - Margin Expansion A Positive Surprise: ICICI Direct
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Tata Consultancy Service Ltd. reported Q2 FY22 results. U.S. dollar revenues grew 2.9% QoQ to $6,333 million, 4% QoQ constant currency growth.
Ebit margins improved 10 basis points QoQ to 25.6%. The company’s deal pipeline continues to be healthy at $7.6 billion.
TCS is key beneficiary of multi-year growth (15-20%) in digital technologies.
Increase in outsourcing in Europe, vendor consolidation and deal pipeline leading to revenue compound annual growth rate of 15.9% over FY21-23E.
Industry leading margins to continue; expect margins to improve 190 basis points over FY21-23E.
Double-digit return ratios, strong cash generation and healthy payout.
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