Tata's Top Stock: India's Largest Tech TCS Is Rs 34 Away From Rs 4,000/Share Mark; Hits New 52-Week High

India's largest IT stock is nearing the Rs 4,000 mark. On Friday, Tata Group-backed flagship firm Tata Consultancy Services (TCS) touched a new 52-week high of Rs 3,982.05 apiece on BSE. The upside comes after TCS emerged as One of the World's Most Admired Companies by FORTUNE Magazine. TCS share has the potential to touch even higher mark to the tune of Rs 4,100. Brokerage KR Choksey is the latest to set target price on TCS and it expects the share to touch Rs 4,151.

TCS Share Price:

TCS share price touched a new 52-week high of Rs 3,982.05 apiece on Friday's trading session, before ending at Rs 3,966.35 apiece, up by 3% on BSE.

The company's market cap is at Rs 14,51,307.84 crore. This makes TCS the largest IT company in the country.

In six months, TCS' share price has gained by 17% on BSE.

On February 1, TCS was named in the FORTUNE Magazine 2024 list of the World's Most Admired companies. Guided by a deep-rooted culture of innovation and commitment to driving value for customers, TCS retained a spot on the list for the second time since debuting last year.

K. Krithivasan, Chief Executive Officer and Managing Director, TCS said, "TCS has always prided itself on constantly reimaging and reinventing itself, and helping our clients derive value from successive waves of technological innovation. With rapid advancements in Artificial Intelligence, we are now geared up to scale experimentation and realize the potential of this opportunity. Being named to Fortune's list of the World's Most Admired Companies is an honour."

CEO added, "It bolsters our global brand, underlines our culture of innovation and ability to attract the best talent worldwide, and recognizes our track record of enabling high-value business transformation for our customers."

TCS' presence on the list is a recognition of its culture of innovation that percolates through the ranks of its employees. As of December 31, 2023, the company has applied for 7,852 patents and has been granted 3,458. The company not only strives to create value for its customers through innovation but actively seeks out opportunities to co-innovate with clients and partners in academia, as per the regulatory filing.

Over the past year, TCS has made significant efforts to build one of the largest AI-ready workforces in the world. Having trained more than 150,000 of its employees in generative AI, it has launched the TCS AI Experience Zone, an experiential platform for its associates to explore GenAI tools. This enables them to experiment with GenAI in new ways while providing necessary guardrails and upholding Responsible AI principles. TCS was recognized as a leader in Artificial Intelligence by several key analyst assessments.

TCS Dividend Payout:

TCS share price recently turned ex-dividend for 2700% dividends payout amounting to Rs 27 per share. Of the total, the company is paying a third interim dividend of Rs 9 per share or 900% and a special dividend of Rs 18 per share or 1800% for FY24.

In its regulatory filing, TCS said that it would paythe third and special dividend on Monday, February 5, 2024, to eligible equity shareholders of the company. These eligible shareholders are those whose names appear on the Register of Members of the Company or in the records of the Depositories as beneficial owners of the shares as of Friday, January 19, 2024, which is the Record Date fixed for the purpose.

So far in FY24, the company has already paid first and second interim dividends of Rs 9 each (1800% each) to its shareholders.

TCS Share Price Next Target:

In its latest research note, KR Choksey said, "TCS expects operating model transformation including Gen AI, cloud, cyber resilience and digitalization, amongst others to be a key demand driver. The Company is leveraging the same to provide solutions to clients across various verticals such as fashion, banking, insurance and aerospace. The Company is launching Gen AI products around industry value chains, SDLC reimagination and responsible AI framework. TCS also seeks to offer differentiated products by integrating the technology across its products and platforms."

On the valuation, KR's note said, "Given the size of the Company, key deal wins, focus on enhancing capabilities in key demand areas, we believe that TCS will be able to navigate the current macro-economic conditions. The Company is currently trading at 30.7x/27.2x on FY24E/FY25E earnings. We introduce FY26E numbers, including FY26E EPS of ~INR 159.7. Applying a P/E multiple of 26.0x to our FY26E EPS, we arrive at a Target Price of Rs 4,151 on the stock."

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.