Tata Consultancy Services (TCS) shares gained 6 per cent to hit an intraday high of ₹4,297 on Friday, following Q3 results and optimistic stance of brokerages.
The company’s net profit increased 5.5 per cent to ₹12,380 crore in the third quarter of FY 2024-25. It also declared a dividend of ₹76 per share, including a special dividend of ₹66.
Brokerages have been bullish on the stock following strong commentary from the management, modest revenue (slightly below street estimates), and strong deal wins.
Nuvama Institutional Equities said the PAT and EBITA were in-line with its estimates. “TCS’ Q3FY25 results tick all the boxes despite benign expectations,” it said.
The brokerage observed that the management commentary was most positive over the last two years, guided to higher growth in CY25, citing early signs of revival in discretionary spending. It has retained a buy call on the stock at an increased target price of ₹5,200 from ₹5,100 earlier.
Emphasising that this IT major’s valuations remain attractive against peers such as Infosys and HCL, Nuvama’s report reasoned, “We view the strong deal-wins and management’s efforts to offset the BSNL revenue impact as positive triggers for TCS. The revival in developed market growth and discretionary spends marks incrementally positive signs for the industry.”
Domestic brokerage Motilal Oswal sees a 24 per cent upside potential for TCS. The brokerage has reiterated buy rating on the stock at a target price of ₹5,000. “Looking ahead to FY26, a recovery in discretionary client spending and a strong US economy could present a more favourable growth environment,” the report read.
Motilal added that TCS is well positioned to grow over the medium term, given the size, order book and exposure to long-duration orders and portfolio.
Global brokerage Nomura has maintained neutral stance on the stock at a reduced target price of ₹4,020 from ₹4,050. Meanwhile, Jefferies and CLSA have assigned buy ratings at target prices of ₹4,760 and ₹4,546, respectively.
HSBC has assigned hold at a target price of ₹4540.
JM Financial upgraded the stock with buy rating at an increased target price of ₹4,680 from ₹4,230, The brokerage noted that the management highlighted Gen AI, AI and cloud services continued to see significant growth in the quarter.
Emkay Global analysts said TCS’s Q3 FY25 operating performance was a tad weaker than estimates. The brokerage has trimmed its estimate by 1-3 per cent, factoring in the Q3 miss and higher dividend payout. Analysts have retained ‘add’ call on the stock at a target price of ₹4,500.’
TCS shares closed among the top gainers among Nifty 50 constituents, 5.60 per cent higher on the NSE at ₹4,265. On the BSE, it ended 5.67 per cent positive at ₹4,265.55.
The Nifty IT index gained 3.44 per cent to 44,609.50, despite the market pressure. Other top Nifty 50 stocks include Tech Mahindra, HCL Technologies, Infosys and Wipro.