Evaluating TCS Q1 Results : Buy, Sell, or Hold?
Government's plans to increase the HMDA limits up to the Regional Ring Road (RRR) have turned the tide in favour of the real estate sector.
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Tata Consultancy Services Ltd (TCS) began the June quarter with a strong performance, surpassing expectations despite a challenging period.
The Q1 revenue exceeded forecasts, margins remained solid despite wage hikes, and headcount grew after six quarters of decline or stagnant growth.
Analysts highlighted management's optimism about recovery in the BFSI sector and a stabilisation in the retail vertical.
US banking clients returned, focusing on cost optimization projects. Order wins were muted, and TCS currently has a 'Buy' recommendation from stock analysts.
Financial services company Motilal Oswal has a buy rating on TCS with a target price of Rs 4001.15.
Nirmal Bang said that TCS’s net addition of over five thousand employees on a QoQ basis can be seen as a positive variable.
“Post 1QFY25, we have tweaked our Revenue and EPS estimates marginally upwards for FY25-FY27E considering a healthy deal pipeline, margin outperformance and increasing AI projects. While we believe that TCS can deliver sustainable earnings growth, the best margins, strong ROICs and healthy cash flows in the Tier-1 space, we see FY25-FY27E revenue CAGR at ~10.3%. We value TCS at 27x June 26E EPS (average 5-year mean +1SD),” Nirmal Bang said.
It recommended buy rating on the stock with a target price of Rs 4,592.
Following the better-than-expected Q1 results, Antique Stock Broking has kept its 'Hold' recommendation on the TCS stock, however, it raised its price target to Rs 4,275 from Rs 4,250 due to a 1 percent increase in FY 26/27 EPS.
