Tata Consultancy Services (TCS), the super stock and biggest company of Tata Group in terms of valuation, has reacted to its better-than-expected Q4 earnings. Also, TCS has announced a final dividend payout of Rs 28 per share ahead of FY24. On April 15, TCS shares traded volatile, leaning more towards a bearish tone. Nonetheless, it brings buying opportunities as 8 brokerages have recommended buying with the highest target price being Rs 4,700 apiece.
TCS Share Price:
TCS stock opened in red at Rs 3995 apiece and rose to an intraday high of Rs 4063 apiece before correcting into the red zone. The stock is trading at its intraday low of Rs 3960.45 apiece, down by 1% with a market cap of Rs 14,33,992.81 crore at the time of writing on BSE.
TCS Q4 Earnings:
In Q4FY24, TCS earned a consolidated net profit of Rs 12,434 crore, which was attributable to its owners, rising by 9.1% YoY and 12.44% QoQ.
On the top-line front, consolidated revenue came in at Rs 61,237 crore in Q4FY24, registering a growth of 3.51% YoY and 1.08% QoQ. In constant current, TCS revenue growth stood at 2.2%. On segment-wise revenue, BFSI, technology & services, communication and media, and consumer business revenue remained under pressure due to the challenging conditions in the IT sector.
Overall, in FY24, TCS' order book TCS reached an all-time high of $42.7 billion, while TCS was at a record $13.2 billion alone in Q4.
FY24 revenue stood at Rs 240,893 crore, up by 6.8% YoY. Constant currency revenue growth is at 3.4% for the entire fiscal. Bottom-line aka PAT was at Rs 46,585 crore, up by 10.5% YoY.
TCS Dividend:
TCS has recommended a final dividend of Rs 28 per share having a face value of Rs 1 each which shall be paid/dispatched on the fourth day from the conclusion of the 29th Annual General Meeting, subject to the approval of the shareholders of the company.
The final dividend's record date, ex-dividend date, and payment date will be announced soon. There are two types of dividend namely interim and final. Generally, the final dividend is higher than the interim.
Earlier, TCS paid a whopping 4,500% dividend aggregating to Rs 45 per share for FY24 in a series of interims. The first interim and second interim dividends were Rs 9 per share for which TCS turned ex-dividend in June and September 2023. TCS also paid a third interim dividend of Rs 9 per share along with a special dividend of Rs 18 per share for which it turned ex-dividend in January 2024.
Buy Or Sell TCS Share?
Motilal Oswal On TCS:
Given its size, order book and exposure to long-duration orders and portfolio, TCS is well positioned to withstand the weakening macro environment and ride on the anticipated industry growth.
Owing to its steadfast market leadership position and best-in-class execution, the company has been able to maintain its industry-leading margin and demonstrate superior return ratios.
We maintain our positive stance on TCS. Our TP of INR4,600 implies 27x FY26E EPS, with a 15% upside potential. We reiterate our BUY rating.
JP Morgan On TCS
The brokerage updated to Overweight while raising its target price to Rs 4,500. It said, that with deal signings at highest ever & TTM book to bill at 1.5x, TCS is likely to outpace peers in FY25.
Goldman Sachs On TCS:
Goldman now expects double-digit earnings growth in FY25. It continues to forecast a c.8% rev growth in FY25 (was 3.4% in FY24), & exit margins suggest the set-up for a double-digit EBIT/EPS growth in FY25 is good. Hence, Goldman said BUY for the target of Rs 4,350.
UBS On TCS:
This brokerage has set the highest target on TCS to Rs 4,700 with a BUY rating. UBS said that FY24 ended on a good note for TCS with remarkable deal wins & +ve margin surprise in 4Q (100bp). However, it added, "Despite all +ves, management appeared to be holding back on calling out growth revival. Conversion of large deal wins into rev is a matter of time."
HSBC On TCS:
HSBC said that TCS profit beats for Q4, driven by strong margin expansion while revving a tad lower. It added, "Deal wins strong with BBR at 1.8x; however, management remained non-committal on recovery pace for 1H FY25."
Hence, HSBC also recommends buying TCS for the target of Rs 4,540 apiece.
Morgan Stanley On TCS:
Stanley finds Q4 results and management commentary mixed. It said, that margin surprise lifts EPS est 2%, but commentary on limited visibility into near-term revenue growth trends could be a near-term multiple drag.
MS maintained overweight with a target price of Rs 4,350 apiece on TCS.
Phillip Capital On TCS:
We increase our FY25-26 EPS estimates by 1-2% on slightly higher margins. We expect TCS to deliver 7.5%/9.5% USD revenue growth with 25.2%/25.5% EBIT Margins in FY25/26. We continue to value TCS at 27x FY26 EPS. Price target Rs 4390 (vs 4330 earlier). Maintain BUY.
Prabhudas Lilladher On TCS:
TCS is well positioned to capture those spends and win disproportionately among its peers, which is very well evident through robust wins and strong executions during the quarter. We estimate revenues/earnings CAGR of 8.1%/11.5% over FY24-FY26e. The stock is currently trading at 25x FY26e, we are assigning P/E of 27x to FY26e with a target price of INR 4,360. With that, I assume coverage on TCS with an "ACCUMULATE" rating.
Dhruv Mudaraddi, Research Analyst, Stoxbox On TCS:
TCS has displayed modest growth in a muted macro environment and has yet again set the operational performance standard for the rest of the large-cap pack to follow. The mega deal at Aviva will continue to yield better utilization levels and margin accretive growth going forward until the first half of FY25. The order book has seen consistent growth to record levels which sets TCS apart and we'll continue to see this benefit its growth trajectory.
The quarter completes one year for the new management and the continuity and benefits from that are now bound to show in the coming quarter extending the operational improvements that we have already seen. Since the IT spending budgets have been finalized by the end of March, we expect an uptick in deal acquisitions and project ramp-ups commencing in Q1FY25, thus reinforcing TCS's optimistic outlook.
Disclaimer: The recommendations made above are by market analysts and are not advised by either the author or Greynium Information Technologies. The author, 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.
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