Motilal Oswal's latest research on TCS underscores its steadfast market leadership and robust financial performance. With revenue of USD 7.5 billion in 3QFY25 and a deal TCV of USD 10.2 billion, TCS is poised for a significant recovery in discretionary spending. Despite a sequential revenue dip of 1.7% in USD terms, growth in India and MEA offset North America's decline. The research house has reiterated its BUY rating on TCS, with a target price of Rs 5,000, implying a 24% upside potential. This comprehensive report dives into TCS's financials, technical analysis, and future outlook.

Financial Performance: A Snapshot

Key Figures

Revenue: USD 7.5 billion (down 1.7% QoQ)
EBIT Margin: 24.5% (up 40 basis points QoQ)
PAT: Rs 124 billion (up 4.1% QoQ, 12.1% YoY)
Deal TCV: USD 10.2 billion (up 18.6% QoQ, 25.9% YoY)
India led growth with an 8.2% QoQ increase, while North America saw a 1.5% decline due to cost-saving deals and ramp-downs in critical projects.

Valuation and Target Price

Motilal Oswal values TCS at 30x FY27 EPS, maintaining a target price of Rs 5,000. This reflects a robust 24% upside potential, supported by improving discretionary spending and shorter deal cycles.

Technical Analysis: Key Patterns and Levels

Candlestick Patterns
TCS formed a Bullish Harami on the daily charts, indicating potential reversal from recent lows. Strong buying volumes validate this trend.

Fibonacci Retracement Levels
Using a 52-week high of Rs 4,592 and low of Rs 3,592, the key retracement levels are:

TCS is hovering near the 50% retracement level of Rs 4,092, suggesting a possible move toward Rs 4,191.

Support and Resistance Levels

Immediate Support: Rs 3,835
Immediate Resistance: Rs 4,191
Key Resistance: Rs 4,348

Management Commentary

Management emphasized the revival of discretionary spending and an uptick in client decision-making cycles. Key drivers include:

Growth in application modernization and cloud initiatives, bolstered by generative AI adoption.
Robust deal wins across BFSI, Retail, and Regional Markets.
Focus on operational efficiency to offset seasonal headwinds.

Competitive Landscape

Infosys (INFY)

Market Cap: Rs 6.55 lakh crore
Key Strength: Strong presence in BFSI and digital transformation projects.
HCLTech

Market Cap: Rs 3.67 lakh crore
Key Strength: Dominance in IT infrastructure services and engineering R&D.
Both peers exhibit strengths in niche segments but lag behind TCS's diversified portfolio and scale.

Actionable Insights for Investors

Short-Term Strategy

Enter near Rs 4,092, targeting Rs 4,348 with a stop-loss at Rs 3,835.
Medium-Term Opportunity

Accumulate between Rs 3,992 and Rs 4,092 for a potential breakout above Rs 4,348.
Long-Term Investment

Hold positions for the Rs 5,000 target as TCS capitalizes on discretionary spending recovery and robust deal wins.

Long Term View: Positioned for Growth

TCS’s Q3FY25 performance demonstrates its resilience and ability to adapt to market dynamics. With a strong deal pipeline and improving client sentiment, the company is well-positioned to sustain its market leadership. Motilal Oswal's bullish stance, supported by robust financials and technical indicators, makes TCS a compelling buy for both short- and long-term investors.