Tata Consultancy Services (TCS) shares will be in focus on February 27 as global brokerage UBS upgraded its rating to ‘buy’ from neutral on the IT services stock. The Swiss analyst has also raised its target price by 17.5% on the stock to ₹4,700 from ₹4,000.
UBS has high hopes for TCS in the financial year 2024-25, as it expects the tech behemoth to lead its peers in revenue growth by 100-150 basis points as well as in terms of margin improvement.
The brokerage believes the market is not pricing in the company’s lead to its peers, given a divided consensus. The stock remains at the lower end of its long-term trading premium versus peers, it said.
According to UBS, growth drivers for TCS include the ramp-up of large deals such as BSNL, NEST, Aviva, etc, revival in the banking, financial services, and insurance (BFSI) segment and cloud migration projects, and continued managed services demand strength at the industry level.
Among other brokerages, 25 analysts have a buy call on TCS, 11 suggest holding it while 11 recommend selling it.
In the December 2023 quarter, TCS reported revenue of ₹60,583 crore and the company's net profit on an adjusted basis stood at ₹12,016 crore.
The firm reported an EBIT or earnings before interest and tax of ₹15,155 crore during the quarter, which was 4.6% higher sequentially. The EBIT margin expanded by 70 basis points to 25%.
Deal wins during the quarter stood at $8.1 billion, the company said. The Tata Group giant had won deals worth $11.2 billion during the quarter.
Meanwhile, TCS shares have increased investors' wealth by 20% in the past year, just a little less than a 22% rise in benchmark Sensex during the period.
(Edited by : Akanksha Upadhyay)
