TCS share price jumped 8 per cent to Rs 1,852 apiece on BSE in Friday’s trade even as the company reported a 0.94 per cent on-year dip in the March quarter in its consolidated net profit for the quarter ended March 31. The company reported a net profit of Rs 8,049 crore in the fourth quarter of FY20, as against a profit of Rs 8,126 crore in the corresponding quarter of the previous year. The company has also announced a final dividend of Rs 6 per equity share of Rs 1 each of the company. Post fourth quarter earnings, research and brokerage firms have mixed views on the stock. Even as the coronavirus (COVID-19) pandemic had hurt the company’s business, TCS clarified that it will not retrench employees and would continue to give promotions. TCS also announced that those recruited in FY20 would be taken on board. It will start onboarding trainees once their term ends in mid-June to July, till the end of the year.
IT bellwether TCS was the top BSE Sensex gainer in today’s trade. TCS shares were trading 5.47 per cent higher to Rs 1,809 per equity in the afternoon deals. Research and brokerage firm Motilal Oswal has given a neutral rating to the stock with a price target of Rs 1,900, a 10 per cent upside from Thursday’s closing of Rs 1715. “While we continue to be positive on the company, we remain Neutral given the current volatile environment, weak outlook and rich multiples,” Motilal Oswal said in its research report. Company has a historical track record of adapting to multiple business challenges and technology change cycles. “The COVID-19 pandemic is expected to pose continued near-term challenges on demand, supply, pricing and working capital fronts,” the report added.
While another brokerage and research firm HDFC Securities has given ‘reduce’ rating to the stock with a revised target price of Rs 1,680 from Rs 1,770 previously. “Demand-related factors worsen while supply constraints are expected to recover ahead,” HDFC Securities said in its research report. “Life-sciences & Healthcare vertical and Communication & Media vertical are expected to outperform other verticals. Within geographies, Europe-led outperformance continued,” it added.
On the other hand, Sharekhan expects a 12 per cent upside in the stock price post fourth-quarter results with a target of Rs 1,920 per share. “We believe that TCS is an excellent business to own at the right price and the recent correction in the stock price offers investors that opportunity. Hence, we maintain our Buy rating on the stock with a revised PT of Rs 1,920,” Sharekhan said in its latest research report.
Owing to a more balanced business outlook with hopes for a demand recovery by third quarter of the current financial year, JM Financial has maintained ‘hold’ rating to the stock with a 12 months target price of Rs 1,820, which TCS already hit in today’s intraday trade. ” While 4QFY20 headline financials were marginally weaker than our expectations, we expect the reassuring commentary and a demonstrated ability for strong cash generation should support the stock’s premium valuations,” it said in a report.