TCS share price jumps over 3% ahead of Oct-Dec quarter results; large deal wins, outlook on margins eyed

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Updated: Jan 08, 2021 4:35 PM

TCS share price jumped over 3 per cent in intraday deals today on BSE ahead of October-December quarter earnings.

TCS, Tata Consultancy ServicesFrom the 52-week low of Rs 1,504.40 apiece, TCS stock price has more than doubled, rising 106 per cent.

TCS share price jumped over 3 per cent to hit a fresh record high of Rs 3,127.55 apiece intraday on BSE ahead of October-December quarter earnings. The Information Technology (IT) sector has been among one of the best performing sectors in FY21. The Nifty IT index has surged nearly 2 per cent to 25,727.10 levels. According to an analyst, generally, Q3 is a slack quarter for IT companies. AR Ramachandran, Co-founder & Trainer, Tips2trades told Financial Express Online that this time, investors are expecting the best quarterly performance from TCS along with other companies like Infosys, HCL Technologies and Wipro with dollar revenue growth of over 3% as against 1%.

According to Suyog Kulkarni, Senior Research Analyst, Reliance Securities, Nifty IT is likely to enjoy premium valuation versus broader market, driven by mid-term growth visibility, stable margins and consistent cash return policy.

Analysts at JM Financial Services expect a 2.3 per cent sequential growth with a 50 bps cross-currency gain. “We are building in a sequential EBIT margin contraction of 80 bps due to wage increments implemented from Oct 1 and slight INR appreciation. According to the domestic brokerage firm, key things to watch out for would be large deal TCV, outlook on CY21 client spending, and outlook on margins over the medium term.

Ramachandran also said that technically, if earnings remain as estimated, then he believes that it has been factored in the stock price. “Investors are advised to book profits on every rise,” he said.

From the 52-week low of Rs 1,504.40 apiece, TCS stock price has more than doubled, rising 106 per cent. Analysts at ICICI Securities expect Indian IT sector to deliver strong sequential revenue growth led by fewer-than-usual furloughs, and residual recovery from Covid decline over H1CY20. It also believes that product-related seasonality/large deal ramp-ups too should help in some cases and margins may remain stable.

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