Q2 Results Update: How IT Giant TCS' Share Price Are Performing Ahead Of Earnings Today?

Tata Group's flagship company, Tata Consultancy Services (TCS) witnessed cautious betting as the shares traded mildly higher ahead of its Q2FY24 earnings scheduled later on Wednesday. However, this IT stock is floating near its 52-week high. Investors will also be eyeing announcements like buyback plans and interim dividend recommendations from TCS today.

TCS shares opened at an intraday high of Rs 3,664 apiece on Wednesday, before correcting to hit the day's low of Rs 3,621.05 apiece. Nevertheless, the stock has picked up momentum and is currently trading at Rs 3,633.75 apiece, up by 0.13% on BSE.

TCS is the largest IT firm and second largest company in India after RIL, with a market value of nearly Rs 13.3 lakh crore at the current market price.

The stock's 52-week high is at Rs 3,680 apiece on BSE, and it would be interesting to watch if Q2 earnings could give the much-needed boost to TCS for crossing this level. From its 52-week low of Rs 3,053.30 apiece, TCS shares are currently up by 19% on the exchange.

In the previous session, the stock price stood at Rs 3,629.20 apiece.

On October 11th, TCS will announce its Q2 earnings for FY24. Along with it, the company's board will also consider a buyback proposal and a second interim dividend for the fiscal.

In the case of buyback, the last time shares were bought back by TCS was Rs 18,000 crore in 2022, followed by Rs 16,000 crore buyback each in 2020, 2018 and 2017.

Further, in the case of dividends, TCS has already paid the first interim dividend to the tune of 900% amounting to Rs 9 per share. In FY23, TCS paid an eye-bulging 11,500% totaling Rs 115 per share.

During the June 2023 quarter, TCS recorded a net income of Rs 11,074 crore, up by 16.8% YoY with a net margin of 18.6%. Revenue stood at Rs 59,381 crore, soaring by 12.6% YoY. In constant currency, the revenue growth was at 7% YoY. Operating margin also expanded in the quarter to 23.2%. Also, TCS revised its FY24 revenue guidance to 5% in July against the earlier 7% guidance.

According to Axis Securities preview note, TCS is expected to report revenue growth of 1.5% QoQ. Its moderation of subcon costs is likely to expand margins by 80bps.

Key attributes to watch out for are a) Deal TCV/pipeline, b) Pricing scenario, and c) Outlook on growth/margins/DSO days.

While Nuvama in its note said, "We expect TCS to deliver 0.5% CC revenue growth and 0.3% USD growth, QoQ. We expect margins to improve by 30bps QoQ - impact of wage hike normalization given in Q1. We expect strong deal-wins streak to continue, with a cautious commentary. Commentary on client spending and AI will be keenly sought."

Further, in Q2FY24, B&K Securities expects TCS revenue to come at Rs 60,256.7 crore, up by 1.5% QoQ and 8.9% YoY, while adjusted PAT is projected at Rs 11,603.6 crore, up by 4.8% QoQ and 11.2% YoY. EBITDA margin is expected to expand to 26.5%.

TCS is also B&K's top pick in the tier-I IT sector amidst the earnings. Hence, the brokerage has given a buy rating on TCS.

Disclaimer:

The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.