TCS shares price fell 1.21% to Rs 3202.80 on Thursday after the IT giant’s net profit in the fourth quarter missed market estimates. Tata Consultancy Services’ fiscal fourth-quarter net profit came in at Rs 11,392 crore, up 5% from the previous quarter. Revenue was recorded at Rs 59,162 crore in the fiscal fourth quarter, rising just about 1.6% from the previous quarter’s Rs 58,229 crore. The quarter’s operating margin was 24.5% and the net margin was 19.3%. TCS declared a final dividend of Rs 24 per share, taking its total dividend payout for the financial year 2022-23 to Rs 107 per share.
Should you buy, hold or sell TCS shares?
Nirmal Bang: SELL – Target Price: Rs Rs 2,638
Analysts at Nirmal Bang maintain a ‘SELL’ rating on TCS with a target price (TP) of Rs 2,638, representing 12-month forward PE of 19.3x on FY25E EPS. “We have an explicit view of a shallow recession in the US in CY23 and hence our near-term cautious view. From a medium-term perspective, we believe that the street is overestimating industry growth by 300-400bps. We see the higher competitive intensity and a non-zero interest rate regime drag on growth. Post 4QFY23, we have modestly cut our EPS for FY24-FY26 largely on the back of lower other income following a significant dividend payout in FY23 (100%),” said analysts at Nirmal Bang.
Choice: NEUTRAL – Target Price: Rs 3,323
“Cognizant of the uncertainty around the macro-environment worsened by near-term recessionary risks, we have trimmed our estimates and maintain a NEUTRAL rating on Tata Consultancy Services stock with a revised target price of Rs 3,323 implying a PE of 25x (unchanged) on FY24E EPS of Rs 133,” said analysts at Choice Institutional Research.
Kotak: ADD – Fair Value: Rs 3,320
“We maintain an FY2024E c/c revenue growth forecast of ~7% based on weak near-term and wallet share gains in cost takeout and transformation deals. The onsite cost increase was a negative surprise, driving margins and 2% EPS cuts. We maintain ADD rating for TCS shares with a Fair Value of Rs3,320 based on 22X FY2025E EPS,” said analysts at Kotak Institutional Equities.