TCS Stocks Outlook: Despite the strong quarterly results, shares of Tata Consultancy Services (TCS), the country’s largest IT company, are seeing a decline. On the next day of the results, on April 13, TCS shares weakened by nearly 4 per cent to Rs 3100. Earlier on Monday, the stock closed at Rs 3247. However, most experts and brokerage houses are further positive on the company’s growth. Most experts have advised to buy shares, although they believe that investors can get limited returns only.
FY21 finale
The fourth quarter has been better for TCS. According to brokerage house Motilal Oswal, revenue in the CC term grew by 4.2 per cent on a quarterly basis. This is more than anticipated. Whereas, on an annual basis, it has grown by 5.9 per cent. USD revenue has also been better than anticipated. It has grown 5 per cent on a quarterly basis and 10 per cent on an annual basis.
Deal record
TCS bagged a deal worth $ 920 million in the fourth quarter, which is a record high. In the same quarter a year ago, the company had won a deal of $ 890 million.
Highest margin in 22 quarter
TCS ‘margin was the highest this time in the 22nd quarter. EBIT margin was 26.8 per cent, higher by 20bp on a quarterly basis and 180bp on an annual basis. TCS ‘consolidated net profit rose 14.9 per cent to Rs 9,246 crore in the January-March 2021 quarter. However, it has been somewhat weaker than anticipated.
Growth in every segment
In the fourth quarter, TCS’s BFSI business saw a growth of 7 per cent on a quarterly basis, 4 per cent in retail and CPG business. Similarly, the company’s life sciences business saw a growth of 3.8 per cent on a quarterly basis and 3.9 per cent in the manufacturing business.
The company hopes for further growth
TCS Chief Executive Officer and Managing Director Rajesh Gopinathan said that over the last decade our investment in developing new capabilities and in research and innovation has prepared the company well for the opportunities for multi-year technology services going forward. Where they will remain strong in traditional areas of strength. Growth and transportation are also making good progress in increasing the share of opportunity. Going into FY 2022, the focus of the company will be to work with clients in its growth agenda, which will help in innovation and the benefit of collective knowledge.
What is advice on investment
Brokerage house Motilal Oswal has given a neutral rating on investment in TCS. A target of Rs 3250 has been given for the stock. However, according to the brokerage, FY22E is showing double digit growth in the company. The company will continue to be a market leader even further.
Brokerage house MK Global has set a target of Rs 3150, giving a hold rating in the stock. The brokerage says that the stock has already gained a lot and valuation is expensive.
Brokerage House Credit Suisse has given an outperform rating on TCS and has set a target of Rs 3750 for the stock. While Goldman Sachs has also set a target of Rs 3646 for the stock, recommending the purchase. JP Morgan has also given an overweight rating on TCS and has set a target price of Rs 3,640.
CLSA has set a target of Rs 3560 for the stock, giving an outperform rating. However, Citi has a sell rating on TCS and has set a target of Rs 2935.
(Note: We have given information here based on the company’s quarterly results and brokerage house report. There are risks in the market, so consult the experts at your level before investing.)
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