⚠ Disclaimer: This report is generated using AI tools and is for informational purposes only. It does not constitute investment advice. Please consult a registered financial advisor before making any investment decisions.
TCS - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 4.4
| Stock Code | TCS | Market Cap | 8,83,211 Cr. | Current Price | 2,441 ₹ | High / Low | 3,710 ₹ |
| Stock P/E | 18.1 | Book Value | 235 ₹ | Dividend Yield | 2.46 % | ROCE | 78.4 % |
| ROE | 65.0 % | Face Value | 1.00 ₹ | DMA 50 | 2,777 ₹ | DMA 200 | 3,114 ₹ |
| Chg in FII Hold | 0.04 % | Chg in DII Hold | 0.17 % | PAT Qtr | 12,684 Cr. | PAT Prev Qtr | 12,486 Cr. |
| RSI | 26.9 | MACD | -129 | Volume | 33,28,530 | Avg Vol 1Wk | 32,25,236 |
| Low price | 2,360 ₹ | High price | 3,710 ₹ | PEG Ratio | 2.27 | Debt to equity | 0.11 |
| 52w Index | 6.01 % | Qtr Profit Var | 7.20 % | EPS | 126 ₹ | Industry PE | 20.9 |
📊 Financial Overview
- Revenue & Profit Growth: Quarterly PAT rose from ₹12,486 Cr. to ₹12,684 Cr. (+7.2%), showing steady earnings growth.
- Margins: ROE at 65.0% and ROCE at 78.4% reflect exceptional profitability and capital efficiency.
- Debt: Debt-to-equity ratio of 0.11 indicates very low leverage, ensuring strong financial stability.
- Cash Flow: Strong due to consistent IT services demand and global client base.
💹 Valuation Indicators
- P/E Ratio: 18.1 vs Industry PE of 20.9 → slightly undervalued compared to peers.
- P/B Ratio: Current Price ₹2,441 vs Book Value ₹235 → ~10.4x, reflecting premium valuation.
- PEG Ratio: 2.27 → indicates moderate overvaluation relative to growth.
- Intrinsic Value: Estimated fair value near ₹2,300–2,400, suggesting current price is close to fair value.
💻 Business Model & Competitive Advantage
- Global IT services leader offering consulting, digital transformation, and outsourcing solutions.
- Competitive advantage lies in scale, brand reputation, and diversified client base across industries.
- Strong R&D and innovation in AI, cloud, and digital services enhance long-term prospects.
📈 Entry Zone & Long-Term Guidance
- Entry Zone: Attractive between ₹2,300–2,400, aligning with intrinsic value.
- Long-Term Holding: Suitable for 5+ year horizon; strong fundamentals and industry leadership make it a solid long-term investment.
✅ Positive
- Exceptional ROE (65.0%) and ROCE (78.4%) highlight efficiency and profitability.
- Quarterly PAT growth of 7.2% shows steady earnings momentum.
- DII holdings increased (+0.17%), reflecting domestic institutional confidence.
⚠️ Limitation
- P/B ratio (~10.4x) reflects heavy premium valuation.
- PEG ratio (2.27) signals moderate overvaluation relative to growth.
- RSI at 26.9 indicates oversold conditions, suggesting near-term weakness.
📉 Company Negative News
- FII holdings increased only marginally (+0.04%), showing cautious foreign investor sentiment.
- Stock trading near 52-week low (₹2,360) highlights recent underperformance.
📈 Company Positive News
- Strong quarterly earnings growth.
- DII holdings increased, reflecting domestic confidence.
- Global leadership in IT services and digital transformation strengthens long-term outlook.
🏭 Industry
- IT services industry is resilient, driven by digital transformation, cloud adoption, and AI integration.
- Industry PE at 20.9 shows sector is moderately valued compared to TCS’s slightly lower P/E.
- Global demand for outsourcing and digital services supports long-term growth.
🔎 Conclusion
TCS demonstrates exceptional fundamentals with strong ROE, ROCE, and steady profit growth. Despite premium valuation on P/B and PEG ratios, its P/E is slightly undervalued compared to industry peers. Entry around ₹2,300–2,400 offers better risk-reward. Long-term investors can hold for 5+ years, benefiting from industry leadership, global demand, and digital transformation trends.