TCS shares hit record high on strong Q4 earnings

Mumbai: Tata Consultancy Services Ltd (TCS), India’s largest information technology (IT) services firm, on Friday hit an all time high after the company posted better-then-expected March quarter earnings on Thursday.

TCS shares gained as much as 5.14% to touch a record high of Rs3,354.75 a share in intraday. At 10.15am, the scrip was trading at Rs3,350 on BSE, up 5% from its previous close. So far this, year it rose 24%.

The company posted a double digit growth in March quarter after 13 quarters of under-performance. Investors also cheered after TCS announced bonus of 1:1 and recommended a final dividend of Rs29 a share.

“Our view on TCS sustained financial outperformance get further reinforced post the management commentary on improved deal signings, broad-based growth performance, and company’s emerging supremacy in Digital business” said Emkay Global in a note to its investors.

The brokerage firm has revised its earning estimates by 1% and 3% for fiscal year 2019 and 2020 respectively and maintained its Accumulate rating on the stock with target price of Rs3,330, up 4.4% from its previous close.

The company’s dollar revenue increased 3.9% (2% in constant currency terms) to $4.97 billion in the quarter. Net profit improved 5.7% to $1.07 billion in the March quarter from $1.01 billion in the preceding three months while operating margin improved 20 basis points to 25.4% from 25.2% in the October-December period.

A Bloomberg survey of 26 analysts had forecast TCS to report revenue of $4.85 billion, or Rs31,659.7 crore, in the quarter. The analysts estimated the company to report a net profit of $1.05 billion, or Rs6,810.37 crore, in the period.

IDBI Capital said in a note to its investors that they are now more confident seeing the best improvement in FY19 revenue growth (organic) amongst IT large-caps. The brokerage firm has maintained its accumulate rating on the stock with a new target price of Rs3,462.

Morgan Stanley and Antique Stock Broking Ltd has upgraded the stock to “overweight” and “buy” from “equalweight” and “hold” respectively.

Of the 51 brokers tracking the TCS stock on Bloomberg, as many as 18 recommended a “buy” rating, 25 have a “hold” rating and 8 have a sell ratings.