TCS - Back to Where We Began
Four years after its IPO, TCS's share price is almost back to where it began, but we think that there's more to come. TCS finds itself in a very sweet spot in terms of the nascent Russian consumer credit cycle and is benefiting from its very strong market position in a less-crowded field, as well as the traction that it is gaining in its non-credit businesses. We raise our 2018-19 EPS forecasts by 26% and 17%, respectively, which still imply a lower earnings CAGR than the management guides (13% in 2018-19 versus 20-40%). We project ROE of around 50% this year and next, so we think there is still upside for a stock trading at a 2018E P/E of 8.1, and we raise our target price to $19.50, keeping our BUY recommendation.TCS Group Holding is a retail banking services group based in the Russian Federation. Co. is principally engaged in providing retail banking services in the Russian Federation through its subsidiaries, primarily Tinkoff Credit Systems. Co., through this subsidiary, fully licensed by the Central Bank of Russia and a member of the Deposit Insurance System, specializes in credit cards. Co. provides online retail financial services through a branchless operating platform. Co. also offers remote access to its financial products and services through its online banking as well as through mobile banking and high-volume call centers.
Sberbank CIB Investment Research is a research firm offering equity, fixed income, economics, and strategy research. It covers analysis on all aspects of Russia’s capital markets, issues and industries. The firm analyzes trends in Russia and combines local knowledge with a global perspective. It processes macroeconomic data, market and company-specific news, stock quotes and other information for providing research reports. The firm provides details and latest prices on the most traded names and most traded paper on all segments Russian market. In strategy research, it provides thematic research, tips and descriptions of the methodology used to evaluate companies.
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