TCS Shares: Should you buy IT stock after Q2 results?

 TCS Shares: Should you buy IT stock after Q2 results?

TCS reported its second quarter results on Monday, read 1 minute.

• TCS Q2 results exceed expectations with revenue, margins and profits beating estimates

India's top IT company's Q2 FY23 results came in ahead of expectations with revenue, margin and profit projections at 8.1 per cent even after shares of Tata Consultancy Services (TCS) fell over one per cent on the BSE in early deals on Tuesday. The billion dollar deal win was steady.

TCS, the largest IT services exporter, on Monday reported an 8% rise in its September quarter net profit at Rs 10,431 crore. The reporting quarter saw an 18% jump in revenue to ₹55,309 crore as against ₹46,867 crore in the year-ago period, but it reduced operating margin by 1.60 percentage points to 24%.

What is the brokerage on TCS shares

Tata Consultancy Services

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3,076.95-44.25 (-1.42%)

Updated - 11 October 2022

3144.55

day high

3054.75

days less

12,84,530.00

Volume (BSE)

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“Deal winnings were steady at $8.1bn, but higher sub-contracts coupled with lower net hiring reflect management's caution amid uncertain macros. We keep our FY23-25 ​​estimates for INR depreciation against USD at 2-5% and expects TCS to deliver 12% EPS CAGR in FY22-24. TCS' premium valuation may be capped upwards," global brokerage Jefferies said while maintaining hold rating on TCS shares at a revised rate of ₹3,180 Said with target price.

“TCS reported quarterly performance largely inline. Reported earnings for the USD were impacted by cross currency headwinds. There was a gradual improvement in EBIT margin (up 91 bps QoQ) due to improvement in employee pyramid and other efficiency measures. "LTM attrition has increased by 180 bps QoQ to 21.5%," said Yes Securities. The brokerage has changed its rating on IT Stock from Buy to Add with a revised target price of ₹3,536 per share.

“TCS is taking some caution to long-term deals and is experiencing some delayed decision making in Europe, but it is seeing a strong spending environment in the US. While we remain concerned about Q3 margins due to the cost optimization timeline, the easing of supply conditions in 2HFY23 as well as benefits from new additions over the past few quarters and lower sub-contractor costs should support margins "Buy the tag with a target price of ₹3,580, as per Motilal Oswal.