Domestic brokerage Anand Rathi has a buy call on TCS shares with a target price of Rs. 4,350 per share. India’s largest IT company on Monday reported a 7.4% jump in March-quarter profits, marking the start of earnings season. Mumbai-based TCS reports a net profit of 9,926 crore for the three months to March 31, above 9,246 crore a year ago, slightly less than analysts’ estimates 10,001 crores.
“With the continuation of strong growth across sectors, we expect continued growth momentum in the medium term supported by a strong deal pipeline and ramp up of larger deals. “We recommend BUY rating on the stock with a revised target price of Rs 4,350 per share,” the brokerage said.
TCS share prices was settled at 0.7% lower 3,664.95 on Wednesday. Its shares are down about 2% on a year-over-year basis.
VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, says, “TCS’s results are as expected. This may support IT stocks even if there is some profit-booking.”
TCS The company posted its highest order book total contract value of $11.3 billion in the quarter, the company said. Management emphasized the demand for IT services at a time when companies across the world are battling cost pressures.
“The growing involvement of our customers in the growth and transformation journey, and an all-time high order book provide a strong and sustainable foundation for continued growth,” TCS Chief Executive Officer Rajesh Gopinathan said in a statement.
TCS’ revenue from operations jumped 15.8% 50,591 crore while the revenue of banking and finance segment grew by 11.2% 19,532 crores. IT company also recommended final dividend 22 per share.
“TCS EBIT margin was flat at 25% QoQ during the quarter. Margins were under pressure during the quarter due to supply side challenges, which were eased by operational efficiencies and currency support,” Anand Rathi said.
“On the people front, the company saw an all-time high net additions in the quarter at 35,309 during Q4FY22, taking the total workforce to ~592,000. LTM attrition was at 17.4% during the quarter. However, the incremental attrition has been moderate.”
Another brokerage Motilal Oswal is also positive on TCS shares, with a target price of Rs. 4240. “We maintain our positive stance on TCS, given its strong growth outlook. IT Services has entered a technology upcycle with cloud migration and digital transformation-led deals coming to market. – Given the size, capabilities and portfolio stretch of TCS, it is well positioned to take advantage of the anticipated industry growth,” the brokerage said.
“This provides the company with ample room to maintain its industry-leading margins and demonstrate superior return ratios.”