TCS - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 4.4
| Stock Code | TCS | Market Cap | 8,38,185 Cr. | Current Price | 2,317 ₹ | High / Low | 3,545 ₹ |
| Stock P/E | 16.0 | Book Value | 234 ₹ | Dividend Yield | 2.76 % | ROCE | 76.7 % |
| ROE | 65.2 % | Face Value | 1.00 ₹ | DMA 50 | 2,473 ₹ | DMA 200 | 2,877 ₹ |
| Chg in FII Hold | -0.71 % | Chg in DII Hold | 0.53 % | PAT Qtr | 14,526 Cr. | PAT Prev Qtr | 12,684 Cr. |
| RSI | 39.2 | MACD | -51.7 | Volume | 35,08,052 | Avg Vol 1Wk | 48,97,252 |
| Low price | 2,206 ₹ | High price | 3,545 ₹ | PEG Ratio | 1.58 | Debt to equity | 0.11 |
| 52w Index | 8.28 % | Qtr Profit Var | 30.7 % | EPS | 136 ₹ | Industry PE | 20.7 |
📊 Core Financials
- Revenue & Profit: Quarterly PAT ₹14,526 Cr. vs ₹12,684 Cr. previous quarter, showing strong growth (30.7% YoY).
- Margins: ROE at 65.2% and ROCE at 76.7% reflect exceptional efficiency and profitability.
- Debt: Debt-to-equity ratio of 0.11 indicates very low leverage, strong financial stability.
- Cash Flow: Robust due to consistent earnings and diversified IT services portfolio.
💹 Valuation Indicators
- P/E Ratio: 16.0 vs Industry PE of 20.7 — trades at a discount, suggesting undervaluation.
- P/B Ratio: Price ₹2,317 vs Book Value ₹234 → ~9.9x, relatively expensive compared to assets.
- PEG Ratio: 1.58 indicates fair valuation relative to growth.
- Intrinsic Value: Current price appears attractive given strong fundamentals and discount to industry PE.
💻 Business Model & Advantage
Tata Consultancy Services (TCS) is India’s largest IT services company, offering consulting, software development, and outsourcing solutions globally. Its competitive advantage lies in scale, brand reputation, diversified client base, and strong digital transformation capabilities. Consistent profitability and global leadership strengthen its overall health.
📈 Technicals & Entry Zone
- RSI at 39.2 indicates oversold territory.
- MACD negative (-51.7) suggests short-term weakness.
- Entry Zone: Attractive accumulation around ₹2,250–₹2,300 range.
- Long-term Holding: Strong fundamentals and industry leadership make it a solid candidate for long-term investors.
✅ Positive
- Strong ROE (65.2%) and ROCE (76.7%).
- Quarterly PAT growth of 30.7% YoY.
- Dividend yield of 2.76% provides steady income.
⚠️ Limitation
- P/B ratio (~9.9x) signals overvaluation relative to assets.
- FII holdings declined (-0.71%).
- Short-term technical weakness indicated by RSI and MACD.
📰 Company Negative News
- FII holdings reduced, showing cautious foreign investor sentiment.
- Premium P/B valuation may limit near-term upside.
🌟 Company Positive News
- Quarterly PAT improved from ₹12,684 Cr. to ₹14,526 Cr.
- DII holdings increased (+0.53%).
- Strong global leadership in IT services and digital transformation.
🏭 Industry
IT services industry PE at 20.7 reflects moderate valuations. Demand is driven by digital transformation, cloud adoption, and global outsourcing. Competition remains intense, but TCS’s scale and brand provide resilience.
🔎 Conclusion
TCS demonstrates exceptional profitability, efficiency, and industry leadership. With a P/E below industry average and strong fundamentals, it appears undervalued despite high P/B. Long-term investors may consider accumulating in the ₹2,250–₹2,300 range, aligning with global IT growth while being mindful of short-term technical weakness.
For deeper insights, you could explore a peer comparison or an industry outlook to complement this analysis.