TCS stock gains over 3% after positive margin expansion in Q3; global brokerages divided

The IT technology services provider during the quarter ended December posted PAT at Rs 11,058 crore, which is a 2.5 per cent decline on a sequential basis. Nevertheless, PAT logged growth of 1.95 per cent on a year-on-year basis.

Zee Business Research desk estimated revenue to come in at Rs 59,900 crore.

TCS share price NSE, TCS Q3 Results: After the technology major TCS reported better-than-expected Q3 performance, shares of the company in early trade on Friday, January 12, gained over 3 per cent to Rs 3,857.95 apiece at day's high. Nonetheless, major foreign brokerages are divided in their views on the stock.

The IT technology services provider during the quarter ended December posted PAT at Rs 11,058 crore, which is a 2.5 per cent decline on a sequential basis. Nevertheless, PAT logged growth of 1.95 per cent on a year-on-year basis.

Revenue from operations inched 1.49 per cent higher on a quarter-on-quarter (QoQ) basis, while it grew 4.04 per cent year-on-year (YoY) to Rs 60,583 crore. Zee Business Research desk estimated revenue to come in at Rs 59,900 crore.

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Margins at the company also increased during the Q3 period to 25 per cent from 24.3 per cent in the preceding quarter.

TCS (CMP: 3736)
Brokerage	Rating	New Target	Old Target
Morgan Stanley	Equalweight	3900
JP Morgan	Neutral	3700
Goldman Sachs	Buy	4310	4200
Jefferies	Hold	4000
HSBC	Hold	3640	3625
Nomura	Reduce	3160	3120
Macquarie	Outperform	4210

Jefferies views TCS Q3 as broadly in line; however, broad-based weakness continues, deal bookings were soft, and a sharp headcount decline suggests that demand recovery is yet not in sight. The brokerage noted that the 70 bps margin expansion was the key positive surprise in 3Q.

Nomura, while maintaining a 'reduce' call, said the company posted good execution in 3Q; nevertheless, it missed deal wins. Further, it highlighted that demand pickup visibility remains low. Not many levers exist for significant margin expansion, added the brokerage.

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