BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.
We increase our target prices on our coverage universe consequent to the upward shift in target price-to-earnings multiple for Tata Consultancy Services Ltd. (our valuation benchmark), as we adjust our valuation framework to the most recent 5-year history in place of the 5-year history pre-pandemic.
Not only has mean price-to-earnings value moved up amid market’s growing confidence in faster earnings growth in the foreseeable future compared to 3/5 year period pre-pandemic, the standard deviation has also seen a significant expansion (from 2.5 in the previous case to 4.2 in the latest framework) due to volatile events in the last 2 years.
The latter does indicate higher risk at current levels with little room for disappointment in fundamental performance.
On the positive side, we see a trifecta that will drive price-to-earnings multiple expansion
(1) faster revenue/earnings growth
(2) higher cash flow conversion
(3) higher return of capital to shareholders.
Click on the attachment to read the full report:
DISCLAIMER
This report is authored by an external party. BloombergQuint does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BloombergQuint.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.