TCS shares rise after Tata group IT major's Q1 results meet analysts' estimates

TCS shares gained on Thursday after the country's largest IT company reported a set of financial results that largely met analysts' estimates.

TCS shares were in demand on Thursday after the Tata group IT major's Q1 results met analysts' estimates. | Image: TCS.com

Tata Consultancy Services (TCS) shares rose on Thursday, a day after the Tata group giant — the country's biggest IT services company — reported a set of quarterly financial results that were in line with analysts' estimates. TCS shares gained by as much as Rs 49.8 or 1.5 per cent to Rs 3,310 apiece in morning deals on BSE.

TCS Q1 results

After market hours on Wednesday, TCS reported a 2.8 per cent decline in net profit to Rs 11,074 crore for the June quarter on a sequential basis. Its revenue expanded 0.4 per cent on a quarter-on-quarter basis to Rs 59,381 crore. The IT major's operating margin, however, contracted by 130 basis points to 23.2 per cent.

TCS management commentary

TCS CEO and Managing Director K Krithivasan, who took charge last month, said the company remains confident in the longer-term demand for its services, driven by the emergence of newer technologies.

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"We are investing early in building capabilities at scale on these new technologies, and in research and innovation, so we can maximize our participation in these opportunities," he said. Key takeaways from TCS Q1 results

"Our operating margin of 23.2 per cent reflects the 200-bps impact of this hike, offset through improved efficiencies... We continue to make the investments needed to power our future growth, including expansion of our delivery and research infrastructure," said Samir Seksaria, Chief Financial Officer, TCS.

EDITOR'S TAKE | TCS management commentary soft

Zee Business Managing Editor Anil Singhvi highlighted that the Tata Consultancy Services management gave a soft commentary along with its in-line results. He sees support in TCS futures at Rs 3,140-3,180 levels and expects a higher level at Rs 3,300.

What brokerages make of TCS results

Brokerages were divided on TCS after the company's earnings announcement. Jeffereis maintained its 'hold' rating on TCS and raised its target price for the stock marginally to Rs 3,450 — implying upside potential of 5.8 per cent from its previous close.

Brokerage	Rating	Target price	Upside/downside (TP vs Wednesday's price)
Morgan Stanley	Equal-weight	Rs 3,305	1.4%
JPMorgan	Underweight	Reduced to Rs 2,650 from Rs 2,700	-18.7%
Jefferies	Hold	Raised to Rs 3,450 from Rs 3,440	5.8%
Citi	Sell	Reduced to Rs 2,835 from Rs 2,860	-13%
Nomura	Reduce	Rs 2,800	-14.1%
HSBC	Hold	Rs 3,390	4%