Tata Consultancy Services: In-line print, with some hope of a 2Q recovery

研报英文原文证据摘录

Tata Consultancy Services: In-line print, with some hope of a 2Q recovery

sus/JPMe, but the beat was Registration: INH000001873, (91-22) 6157-3000.

led by India revenues growing 7.6% CC QQ. International revenues declined

0.1% CC QQ and came in 20bps below JPMe. Overall deal TCV was soft at

Quarterly Forecasts (FYE Mar)

$9.5bn (up 1% YY, down 21% QQ) and included 1 mega deal of $800mn TCV.

Adj. EPS (Rs)

TCS highlighted that AI revenues hit $2.6bn on an annualized basis in 1Q and 2026A 2027E 2028E

grew 13.6% QQ (up from $2.3bn run rate in 4Q). EBIT margins contracted Q1 35.27 36.90A 39.11

130bps QQ, to 24%, broadly in line with consensus but 20bps ahead of JPMe. Q2 33.37 37.92 40.97

Q3 29.45 38.50 40.80

Adjusted PAT (adj. for legal expenses) came in 3%/7% ahead of consensus/ Q4 37.92 39.77 41.50

JPMe. FY 136.01 153.08 162.37

• Optimistic on 2Q. TCS highlighted that the geopolitics-driven demand Style Exposure

uncertainty that started in March continued in 1QFY27 with clients deferring

projects. However, TCS is optimistic on demand resuming in 2Q based on

client conversations as they have a technology backlog that needs to be cleared.

It has provided a positive outlook on BFSI, Tech, Life Science, Manufacturing

and Energy, while headwinds remain in Consumer and Telecom & Media.

• Margins in line. EBIT margins contracted 130bps QQ, to 24%, broadly in line

with consensus but 20bps ahead of JPMe. There was a headwind of 170bps due

to wage hikes that was only partially offset by tailwinds of 40bps from FX and

operational efficiencies. TCS aims to exit FY27 margins at 25%+ but would

like to achieve it sooner than 4Q.

• Remain OW. With a favorable base and good exit rate from FY26, even a

minor growth acceleration from 2Q should lead TCS to overall organic CC