Buy or Sell or Hold TCS :There has been a strong rise in the shares of Tata Consultancy Services Limited (TCS) today. Today TCS stock became stronger by about 5 percent at Rs 4246, whereas on Thursday it had closed at Rs 4039. Due to revival in demand and securing a strong deal of $10.2 billion, the sentiment among investors regarding the company has strengthened. Experts say that in constant currency terms, revenue remained flat on a quarterly basis, but margin expansion of 40 basis points on a quarterly basis is in line with estimates. The IT company has also announced interim and special dividend of Rs 76 per share.
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Estimate of 24 percent return
Brokerage house Motilal Oswal has reiterated its BUY rating on TCS with a target price of Rs 5000, which is 24 percent higher than the current price. The brokerage says that given its size, order book and long-term orders and portfolio exposure, TCS is well positioned for growth in the mid-term. Due to its market leadership position and best-in-class execution, the company has been able to maintain its industry-leading margins and demonstrate superior return ratios.
The brokerage says TCS has reported revenue of $750 million in the December quarter, which is down 1.7% QoQ in dollar terms, while the estimate was for a decline of 0.3%. The company’s growth was driven by India (8.2% QoQ / 66.3% YoY) and MEA (7.7% QoQ), while North America declined 1.5% YoY. EBIT margin beat estimates at 24.5% (+40bp YoY). above). The company’s PAT increased by 4.1 percent on quarterly basis and 12.1 percent on annual basis to Rs 12400 crore, which is less than expected.
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Talking about the first 9 months of FY25, there has been a growth of 6.2 percent, 7.3 percent and 8.5 percent in revenue, EBIT and PAT on annual basis. In 4QFY25, we expect revenue, EBIT and PAT to see year-on-year growth of 7.2 per cent, 7.2 per cent and 9.5 per cent, respectively. TCS registered a deal TCV of $ 1020 crore, which is 18.6 percent higher on quarterly basis and 25.9 percent higher on annual basis. Book-to-bill ratio was 1.4x.
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Global Brokerage Rating
Brokerage firm Bernstein has maintained its “outperform” rating on TCS stock with a target price of Rs 4700. Bernstein cited accelerating deal momentum, broad-based growth and an optimistic management outlook as signs of an upcoming upcycle for the company. Brokerage house CLSA upgraded its rating on TCS to “outperform” from “neutral” and also increased its target price to Rs 4546 from Rs 4251.
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However, Nomura has given “Neutral” rating on TCS with a target price of Rs 4020. The brokerage has expressed concern over the company’s growth visibility for the next financial year. At the same time, brokerage house HSBC has also maintained “neutral” rating with a target price of Rs 4540. According to the report, the company’s performance may be affected due to weak demand in Europe and completion of BSNL deal.
TCS: How have been the results?
TCS’s profit has increased by 12 percent on annual basis to Rs 12,380 crore in the December quarter of financial year 2025. In the same period a year ago, the company had made a profit of Rs 11,058 crore. The company’s revenue increased by 6 percent to Rs 63,973 crore during this period. The company has announced an interim dividend of Rs 10 per share and a special dividend of Rs 66 per share.
The company’s total order book during the December quarter stood at $10.2 billion, compared to $8.6 billion in the previous quarter and $8.1 billion in the same quarter a year ago.
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