TCS Shares Hit New High; Will Value Rise Further?

On 8 October, shares of Tata Consultancy Services (TCS) rose 6 percent to a new all-time high of Rs 2,885, the day after the company reported its earnings for the September-ended quarter. The company reported a 6.7 percent sequential growth in profit after tax at Rs 7,475 crore.

The company's board also approved a buyback worth Rs 16,000 crore of up to 5.33 crore shares which makes for 1.42 percent of the company's paid-up capital at around Rs 3,000 per share.

At this point, brokerages have expressed mixed views on what to do with the stock.

Sharekhan has a "buy" rating on TCS with the price target of Rs 3,150 as it continues to prefer the company on account of its strong business model, stable management, solid execution and strong free cash flows (FCF) generation.

ICICI Direct has upgraded the stock from "hold" to "buy" with a price target of Rs 3,300. It expects TCS to be a key beneficiary of the growth in cloud-native technologies, coupled with industry-leading growth & solutions, better capital allocation, stable management and higher revenue growth trajectory than witnessed in the past warrant a multiple re-rating for the company.

Brokerages Macquarie and CLSA have "outperform" rating on the stock with a price target of Rs 3,030 and Rs 2,750, respectively.

Citi has a "sell" rating on TCS. "The operating leverage & cost controls led to a big margin beat. The medium-term commentary on IT spends is positive, while near-term comments were a bit muted," it said.