TCS Q4 results: Following strong TCS Q4 results, top brokerages CLSA, Jefferies, and HSBC have raised their target price on the shares on India’s largest software services exporter. Notably, TCS has reported a net profit of Rs 6,904 crore, 4.4% higher as compared to last fiscal. The March quarter earnings beat street estimates on most parameters. Taking note of the performance, CLSA said that there is improved growth outlook from large deal wins and digital share gains. The firm has raised the target price on TCS shares to Rs 3,700 from Rs 3,200 earlier. TCS shares hit an all-time high if Rs 3,329 on NSE this morning, on the back of stellar results.
The company has declared a bonus issue of equity shares in a ratio of 1:1, and has also declared a dividend of Rs 29. Since it is a 1:1 bonus issue, TCS share price after bonus is expected to come don by half after bonus issue. TCS said over around Rs 26,800 crore of cash was returned to shareholders in dividends and buyback.
Commenting on the bonus and dividends, CLSA said that TCS is likely to maintain its payout ratios, and the firm expects a share buyback or dividends. Margins were slightly below expectations, despite a 40 bps foreign exchange tailwind, CLSA observed.
Global firm Jefferies said that Q4 revenues have beat expectation and there are positive growth expectations going forward. TCS clocked total revenues of Rs 32,075 crore as against Rs 29,642 crore in the same period in the previous year, implying 8.2% rise on year. Digital Revenue came in at 23.8%, up 42.8% on year. However, the firm observes that the best of positives seems to be priced into the stock. Management commentary bodes well and outlook seems to be strong growth in retail and green shoots in BFSI segment. Jefferies has raised the target price to Rs 3,200.
HSBC observed that strong Q4 revenue bodes well for double digit growth in FY-19. The firm observes that margins are a tad weaker but in a weak environment, not a major concern. The target price on the stock is raised to Rs 2,950, as the firm sees limited upside post the recent run-up.