TCS - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

Fundamental Rating: 4.6

📊 Core Financials Overview

Profitability

ROE: 65.0% and ROCE: 78.4% are exceptional, placing TCS among the most efficient capital allocators in the Indian market.

EPS of ₹134 and PAT of ₹12,552 Cr reflect consistent earnings strength, with a modest QoQ growth of 3.61%.

Operating margins remain robust, supported by scale and high-value service offerings.

Balance Sheet Health

Debt-to-equity ratio: 0.10 — extremely low, indicating a strong balance sheet.

Book Value of ₹209 vs Current Price ₹3,177 → P/B ratio ~15.2, which is high but justified by superior returns and brand equity.

Dividend Yield of 1.89% adds steady income for long-term investors.

Cash Flow & Stability

PEG ratio of 2.97 suggests mild overvaluation relative to growth.

RSI at 59.6 and MACD positive indicate neutral-to-bullish momentum, with price consolidating near 50 DMA.

📉 Valuation Metrics

Metric Value Insight

P/E Ratio 23.7 Slightly undervalued vs industry PE of 30.0

P/B Ratio ~15.2 Premium pricing

PEG Ratio 2.97 Fair-to-stretched valuation

Intrinsic Value ~₹3,008.59 Slightly below current price

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TCS is marginally overvalued by ~5% based on intrinsic valuation models

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, but its fundamentals justify the premium.

💼 Business Model & Competitive Edge

Sector: Tata Consultancy Services Ltd is India’s largest IT services firm, offering consulting, digital transformation, cloud, AI, and cybersecurity solutions.

Strengths

Deep relationships with Fortune 500 clients and preferred-vendor status

Diversified revenue mix: BFSI (32%), Retail (15.6%), Healthcare (10.2%), Manufacturing (8.7%)

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High solvency score (91/100) and profitability score (79/100)

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Challenges

Exposure to BFSI makes it sensitive to global financial cycles

Slight decline in FII holding (−0.56%) may reflect cautious sentiment

TCS’s scale, brand, and execution excellence give it a durable moat in the global IT services landscape.

📌 Entry Zone Recommendation

Suggested Entry Range: ₹3,000–₹3,100

Near intrinsic value and below 50 DMA (₹3,153)

RSI suggests waiting for a mild pullback before entry

🧭 Long-Term Holding Guidance

Hold if Already Invested: TCS is a compounding machine with world-class fundamentals.

Accumulate on Dips: Especially near ₹3,000 for better margin of safety.

Watchlist Triggers

EPS growth and margin expansion

Strategic wins in AI, cloud, and digital transformation

Institutional accumulation and global IT spending trends

TCS remains a cornerstone of any long-term portfolio focused on quality, consistency, and global tech exposure. You can explore deeper insights on AlphaSpread’s valuation dashboard

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or TopStockResearch’s fundamental analysis

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www.alphaspread.com

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investyadnya.in

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www.topstockresearch.com

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