TCS share price: Tata Consultancy Services shares rose on Thursday, a day after the country's largest IT company reported its earnings for the October-December period. TCS also announced a share buyback of Rs 18,000 crore and a dividend of Rs 7 per share.
Tata Consultancy Services (TCS) shares gained on Thursday, a day after India's largest IT company reported its quarterly earnings and announced a buyback of equity worth up to Rs 18,000 crore.
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TCS shares ended with a gain of 1.1 percent at Rs 3,897.7 apiece on BSE. Earlier in the day, the stock rose as much as 2.3 percent to Rs 3,944.4, coming within one percent of a 52-week high, touched in October 2021.
After market hours on Wednesday, TCS reported a 43 percent sequential increase in revenue to Rs 48,885 crore for the December quarter, exceeding Street expectations.
Its net profit of Rs 9,769 crore, up 1.5 percent on a quarter-on-quarter basis, however, missed analysts' estimates. Analysts in a CNBC-TV18 poll had expected the IT major to report a net profit of Rs 9,862 crore over revenue of Rs 48,481 crore.
Revenue in dollar terms came in at $6,524 million for the third quarter of the current financial year. Analysts had estimated it at $6,464 million.
TCS reported an earnings before interest and taxes (EBIT) margin of 25 percent. Analysts had expected the EBIT margin to be at 25.7 percent.
The Tata group IT behemoth said the share buyback will be valued at up to Rs 18,000 crore at Rs 4,500 apiece. TCS also announced a dividend of Rs 7 per share.
Gautam Trivedi, Co-Founder and Managing Partner at Nepean Capital, told CNBC-TV18 he expects the IT sector to continue to lead the market. The quarterly performances of TCS and Infosys were outstanding, not just in terms of revenue guidance but also on the hiring front, he said.
Tata Consultancy Services said it hired 28,238 people in the third quarter of the year ending March 2022 - its highest ever in a quarter.
Trivedi believes a higher attrition rate is positive from a demand perspective. "Some people may not have liked the higher attrition rate. It suggests how strong the demand is and that’s positive," he said.
What brokerages say
Citi has a 'sell' call on TCS with a target price of Rs 3,580 apiece. The brokerage said the company's Q3 results were largely in line with estimates, and the share buyback may support it in the near term.
Goldman Sachs has a 'buy' call on the IT major with a target price of Rs 4,747 apiece. TCS has the lowest attrition in the industry, and the best capability to fulfill and capture growth potential, the brokerage said.
Morgan Stanley has an 'overweight' call on TCS with a target price of Rs 4,400 apiece. The brokerage said the company's revenue growth following a gap of two quarters was surprising. It also said the management's commentary supports expectations of strong growth in 2022.
First Published: IST