TCS share buyback: Morgan Stanley remains 'equal-weight', sees stock at Rs 3,730

The board of TCS is set to deliberate on a share buyback proposal on the same day the IT major is slated to announce its September quarter results.

According to analysts at Morgan Stanley, the share buyback announcement had been anticipated for the last two quarters. The brokerage believes the buyback announcement won't necessarily provide assurance for an outperformance of the TCS stock.

Morgan Stanley has an 'Equal weight' rating on the counter, with a target price of Rs 3,730 per share, indicating an upside potential of 3 percent from the current market levels.

It expects TCS to show a slight improvement in its revenue growth quarter-on-quarter in constant currency terms in the second quarter. The September quarter earnings are also expected to show robust order intake. "Orders expected are robust. However, they are lower than consensus on earnings for FY24/25."

Global brokerage JP Morgan said that investors are likely to parse results and commentary of IT firms for signs of recovery in deal signings in fiscal 2025 following a "washout" year.

The IT giant had last bought back shares worth Rs 18,000 crore in 2022, when it repurchased 4 crore shares at Rs 4,500 apiece. However, the TCS stock has not touched or crossed that buyback price yet.

Prior to 2022, the IT services firm had carried out buybacks worth Rs 16,000 crore each in 2020, 2018 and 2017. In those three instances, it repurchased shares at a price of Rs 3,000, Rs 2,100 and Rs 2,850 respectively. All these buybacks were carried out through the tender offer route.

Shares of TCS, which ended up 0.89 percent on Friday, are up 11 percent so far this year against 8 percent gains in the benchmark Nifty 50 index and 13 percent in the IT sector.