Amid expectation of IT services leaders reporting strong numbers due to high demand from clients in the seasonally weak third quarter ended 31 December 2021, HDFC Securities has an Add call on Tata Consultancy Services stock. TCS is expected to indicate traction from major deal wins in the quarter. The brokerage has set a target price of Rs 4,350 for the stock. The current market price of Tata Consultancy Services is Rs 3,857. The stock is expected to rally around 11-12% in one year to reach the defined target. Meanwhile, Emkay Global also has buy call on Tata Consultancy Services Ltd. with a target price of Rs 4,100. Over the last 12 months, the stock has delivered 24.4% return.
The Nifty IT index has surged nearly 3 percent in the past four trading sessions. However, IT stocks including Tata Consultancy Services (TCS), Infosys and Wipro succumbed to selling pressure on Wednesday, as investors geared up for the upcoming quarterly earnings report. The Nifty IT index tumbled nearly 2.5 per cent intraday on 5 January, its worst intraday fall since December 20. All of the 12 constituents of the Nifty IT pack were down around 2-3 percent in early afternoon deals. TCS was down 1.8 percent, Infosys 2.8 percent and Wipro 2.5 percent. HCL Tech, Tech Mahindra, Mphasis, Mindtree, L&T Infotech, L&T Technologies and Coforge also fell between 1.9 percent and 3.1 percent.
According to a JM Financial Services Ltd. brief, Indian offshore tech companies will continue the revenue growth momentum in an otherwise seasonally weak December 2021 quarter. Tier I IT giants including TCS, Wipro, Infosys are expected to report a 3.8-5.2% QoQ c/c revenue growth with TCS at the lower end and Tech Mahindra at the upper end. Tier II techs are likely to outperform Tier I techs on sequential revenue growth yet again with a 5.5-10.3% QoQ c/c revenue growth. IT companies are likely to continue the hiring momentum though attrition will settle down only over the next 6 months. The brokerage maintains Buy rating on Infy, Tech Mahindra, HCL Tech, and Hold rating on TCS, Wipro, Zensar Tech and L&T Infotech.