TCS Brokerage Report: Tata Consultancy Services (TCS) has performed better than expected in the third quarter. The brokerage house has reported this blockbuster performance. Company revenue growth was the highest in the last 9 years. In the third quarter of the current financial year, TCS’s revenue growth was 4.1% on a quarterly basis. This is the highest since the third quarter of FY 2011. In the third quarter, dollar earnings also showed more growth than anticipated. At the same time, the margin is also at a 5-year high. In such a situation, after the third-quarter results, the stock is expected to grow even further. Know what opinion brokerage houses are giving about the stock.
TCS at a record high
TCS shares reached record highs after policies. The stock rose more than 1.5 per cent and reached Rs 3239 in intraday trading on January 11. Whereas it closed at Rs 3121 on Friday. The company’s market cap has increased to Rs 11.71 lakh crore.
CC revenue better than expected
TCS ‘consolidated net profit rose 7.2 per cent year-on-year to Rs 8,701 crore in the October-December 2020 quarter. The company’s revenue grew by 5.4 per cent to Rs 42,015 crore. CC revenue grew 4.1% per cent on a quarterly basis, while the estimate for it was 2.3 per cent.
Strong Deal Received
TCS received a total deal of $ 680 million in the third quarter. This excludes deals from Postbank in Germany. TCS had won a deal of $ 6450 million in the third quarter of FY 2020. At the same time, the Ebit margin has increased to 40bp on a quarterly basis and 160bp on an annual basis to 26.6 per cent.
Strongest third quarter in the last 9 years
According to TCS, this has been the strongest quarter in the last 9 years. Rising demand for core transformation services and strong revenue from previous deals gave a strong momentum, helping the company to perform at its best in the December quarter. The company is coming with an optimistic outlook in the new year and its position in the market is stronger than ever.
What is the opinion of brokerage?
Brokerage House Motilal Oswal Has given a neutral rating in TCS. A target of Rs 3175 has been set for the stock. It closed at Rs 3120 on Friday. That is, there is a scope of 2 percent increase from the current price. However, the brokerage believes that TCS will benefit from being in the leading position in the growth of the industry. The company has a better chance ahead to increase margins. The brokerage has raised the EPS estimate for FY21 / FY22 / FY23E by 3% / 4% / 6%.
Brokerage House Jefferies The company has given a target of Rs 3720 while recommending the purchase of TCS shares. According to the brokerage, TCS is shocked by the third-quarter results. It is clear from the company’s results that now TCS is benefiting from the increasing demand in this sector. Revenue and margins have been better than expected. Margin has increased even after the wedge hike and new hiring, which is a big positive factor. At the same time, management commentary on growth is going to increase enthusiasm.
JP Morgan Has also given an overweight rating on TCS and has set a target of Rs 3450 in the stock. According to the brokerage, the company’s results have been better than anticipated. The company’s order book is strong. There is a possibility of further growth.
Same brokerage accident Nomura Has given a neutral rating on TCS and has fixed the target at Rs 3070. whereas HSBC Giving a hold rating has given a target of 3200. Ambit Capital Has reduced the target to Rs 2615, suggesting a sell in TCS.
(Note: We have given information here based on TCS quarterly results and brokerage house report. Seeing the risk of the market, take the opinion of experts before investing.)