BackTCS shares among top gainers on Nifty after upbeat Q4 result. Should you buy, sell or hold?
TCS shares rose on Monday after several brokerage firms expressed their positive views as the Indian IT bellwether reported better-than-expected March quarter earnings.
PremiumTCS share price rose nearly 2 per cent in early trade on Monday, April 15, despite weak market sentiment amid escalating tensions between Israel and Iran.
TCS share price rose after several brokerage firms expressed their positive views about the stock as the Indian IT bellwether reported better-than-expected March quarter earnings.
TCS share price opened flat at ₹4,001.40 against its previous close of ₹4,001.40 and rose about 1.6 per cent to hit the level of ₹4,064.20 on the NSE. Around 9:35 am, TCS share price traded among the top gainers in the Nifty 50 index, 0.59 per cent higher at ₹4,024.95, while the Nifty 50 was 1.07 per cent down at 22,277.90.
TCS share price has gained over 5 per cent this year so far against a nearly 4 per cent gain in the benchmark Nifty 50.
TCS Q4 result
TCS reported consolidated revenue from operations of ₹61,237 crore for the fourth quarter of FY24. This was up 3.5 per cent year-on-year (YoY) and 1.1 per cent quarter-on-quarter (QoQ). Revenue in constant currency (CC) terms rose 2.2 per cent YoY.
Its consolidated net profit for the quarter under review stood at ₹12,434 crore, up 9.1 per cent YoY and 12.4 per cent QoQ.
The company's operating margin in Q4 saw an increase of 150 bps YoY at 26 per cent while the net margin saw an expansion of 100 bps YoY at 20.3 per cent.
Also Read: TCS Q4 result: Revenue up 4%, profit rises 9% YoY; top 5 highlights from March quarter scorecard
Brokerage views on TCS
Nuvama Wealth Management upgraded TCS' FY25E and FY26E earnings per share (EPS) marginally by 1.1 per cent and 2 per cent, respectively, and maintained a buy recommendation with a target price of ₹4,560 against ₹4,450 earlier, valuing it at 27 times FY26 PE (price-to-earnings ratio).
Also Read: TCS’ Q4 keeps IT investors in anguish
Nuvama observed the TCS' revenue in Q4FY24 was in line while margin and earnings performance beat estimates.
"We maintain Q3FY24 was the bottom for the earnings downgrade cycle for the sector and expect the strong deal wins of the last few quarters to gradually convert into revenue in coming quarters, even as the US macro becomes favourable. We see TCS as a perfect large-cap proxy to play this upcycle, with its strong deal wins and robust margin performance," said Nuvama.
Brokerage firm Motilal Oswal Financial Services also maintained a buy call on the stock with a target price of ₹4,600.
"Given its size, order book and exposure to long-duration orders and portfolio, TCS is well-positioned to withstand the weakening macro environment and ride on the anticipated industry growth. Owing to its steadfast market leadership position and best-in-class execution, the company has been able to maintain its industry-leading margin and demonstrate superior return ratios," said Motilal Oswal.
Also Read: TCS share price: Q4 results 2024 beat market estimates. Is this a share to buy today?
Kotak Institutional Equities maintained an 'add' call on TCS stock and raised its fair value (target price) to ₹4,300 from ₹4,140 earlier.
Kotak believes weak discretionary spending will extend into the current financial year (FY25), factored in by a nearly 1 per cent cut to FY25-26E revenue, despite strong deal wins.
"A balanced portfolio of services catering to discretionary and a cost reduction focus on enterprises, coupled with strong relationships with a quality F-500 client base, would enable TCS to deliver consistent growth. We expect TCS to outperform peers in FY25 on growth, aided by the BSNL ramp-up," Kotak said.
Among the global brokerage firms, as CNBC-TV18 reported, JPMorgan upgraded the stock to an 'overweight' with a target price of ₹4,500.
"Believe the company is a cross-cycle champion and will benefit from cost takeout deals in the short term. The company will benefit from discretionary digital transformation deals in the medium term," CNBC-TV18 reported JPMorgan saying so.
Morgan Stanley maintained an 'overweight' view on TCS with a target price of ₹4,350, citing strong exit margin supports a better outlook for FY25. Goldman Sachs maintained a buy call on the stock with a target price of ₹4,350, reported CNBC-TV18.
Moreover, Jefferies maintained a hold call on the stock with a target price of ₹4,030. It said Q4 numbers were above expectations but demand pressure persists, CNBC-TV18 reported.
"Despite strong deal bookings, management commentary was cautious. Continued headcount decline and a sharp reduction in subcontractors do not offer comfort. Margin has limited scope to expand further. Premium valuation limits upside. Expect TCS to deliver 6.6 per cent CAGR in constant currency (CC) revenues and 9 per cent EPS CAGR over FY24-26," Jefferies said, as reported by CNBC-TV18.
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Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.
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