Buy This Multibagger Tata Stock To Receive 17% Return, Rs 8 Interim Dividend: Oswal

Leading brokerage Motilal Oswal has given buy call to Tata Consultancy Services Ltd with a target price of Rs 3,580 apiece and a potential return of 16.69%. TCS has announced a revenue of USD6.87b in 2QFY23, up 4.0% QoQ in constant currency (CC) terms, 50bp above our estimates. TCS has also declared its second interim dividend on October 10, 2022 at Rs 8 per share.

1. TCS Stock Outlook

The last trading price of TCS is Rs 3068 apiece with an intraday decline of 1.67%. The stock's 52-week high was quoting at Rs 4045 apiece and 52-week low is Rs 2926 apiece. The shares have fallen 24% from 52-week high range. The company has a market capitalisation of Rs 11,22,944.57

2. TCS Key Highlights

TCS is not witnessing any budget cuts or a deferment in client spends, although some European clients have expressed concerns on the macro demand. There could be some deal softening in Europe, but the US should remain strong for the company.

It is exhibiting some caution on its long-term projects. Clients are building various economic models with some downside due to macro-economic concerns and the company is also experiencing delays in decision-making in some, smaller pockets.

With hiring slowing down in the technology sector and salary expectations moderating, supply side issues should ease off in 2HFY23. LTM attrition in IT services was at 21.5% in Q2. The management suggested that attrition has peaked and expects quarterly attrition to moderate in the coming quarters.

3. TCS Announced Dividend At Rs 8 per share

Tata Consultancy Services Ltd has finally declared its second interim dividend on Monday, October 10, 2022. The company announced a dividend of Rs 8 per share as per its regulatory filing.

The board of directors of TCS in the exchange filing stated, "We enclose the audited standalone financial results of the Company and audited consolidated financial results of the Company and its subsidiaries for the quarter and six month period ended September 30, 2022 under Ind AS, which have been approved and taken on record at a meeting of the Board of Directors of the Company held today. We would like to inform you that at the Board Meeting held today, the Directors have declared a second interim dividend of ₹8 per Equity Share of ₹1 each of the Company."

4. TCS Q2 Result

The profit has risen 8% YoY and TCS has managed to beat estimates. TCS announced an 18% YoY growth in its revenue at Rs 55,309 crore while the net profit surged 8.4% YoY to Rs 10,431 crore.

5. TCS Valuation

According to Motilal Oswal, "We maintain our positive stance on TCS. Our TP of INR3,580 implies 27x FY24E. We maintain our positive stance on TCS. Our TP of INR3,580 implies 27x FY24E."

6. About the company

A part of the Tata group, India's largest multinational business group, TCS has over 592,000 of the world's best-trained consultants in 55 countries. The company generated consolidated revenues of US $25.7 billion in the fiscal year ended March 31, 2022, and is listed on the BSE (formerly Bombay Stock Exchange) and the NSE (National Stock Exchange) in India.

TCS offers a consulting-led, cognitive-powered, integrated portfolio of business, technology, and engineering services and solutions. 

Disclaimer

The stock has been picked from the brokerage report of Motilal Oswal Financial Services. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decisions.