FSV's business model is highly sticky and durable over time. Customers tend to have long-duration contracts with FSV that allow them to have strong and sustainable organic growth. FSV is a high quality dividend growth name in the making with a solid track record of sustained dividend growth. For instance, the most recent dividend increase in 2024 marks the tenth consecutive year of a dividend hike of at least 10%. FSV also runs a moderately leveraged but conservative balance sheet. FSV has a proven business model with a track record of consistent growth and solid shareholder returns over the last 30 years, and the company continues to execute well amid a challenging macro environment. We are upgrading our rating by one notch to ‘A-‘.

A brief update on select companies from the 5i Research coverage list. This report serves as the official rating update on the companies referenced herein. New ratings, if applicable, will be reflected in the Summary report at month-end.

The company’s growth is driven by its shift toward recurring SaaS revenue, professional services backlog, and long-term SaaS contracts, which help to provide predictable cash flow and strong margin potential. Recent results show solid SaaS ARR growth, expanding gross margins, and a robust professional services pipeline, offsetting declines in legacy license and hardware revenue. The company’s capital-light, recurring-revenue model and increasing adoption of cloud solutions position it for sustainable long-term growth. TCS trades at a premium valuation to peers, and while its sales growth is decent, its earnings growth has been inconsistent and volatile. There are several strong underlying trends at TCS, but we would like to see more earnings growth, and as a result, we are downgrading our rating by one notch to a ‘B’.