Brokerage Views: TCS Q1 Results In Analysts Focus, UBS On ABB And More

Tata Consultancy Services Ltd. is on the radar of multiple brokerages after announcing its quarterly earnings for the three months to June. UBS has shared its outlook on ABB India Ltd.

NDTV Profit tracks what the brokerages are putting out on stocks and sectors. Here are all the top calls from analysts that you need to know about on Friday.

Goldman Sachs On TCS

Maintained a ‘buy’ rating on the stock and a target price of Rs 4,470 apiece, implying a potential upside of 14% from the previous close.
Raised target price from Rs 4,450 per share previously.
First quarter results are in line and on track for double digit earnings growth in FY25.
Forecasts sector-leading 6.9% YoY revenue growth in FY25.
Company's cost execution one of the best within coverage.
Will drive 110 bps Ebit margin expansion in FY25, translating into 12% YoY Ebit growth.
Sees neutral-to-positive read-across from TCS' results, for both growth and margins across our coverage, though a worsening of growth in communications verticals could have negative implications for sell-rated Tech Mahindra Ltd.
Valuations are in line with the company's five-year history versus peers trading at a premium, despite it having a better growth outlook versus peers.

Morgan Stanley On TCS

Maintained an ‘overweight’ rating on the stock and a target price of Rs 4,480 apiece, implying a potential upside of 14.1% from the previous close.
Has raised target price from Rs 4,350 per share previously.
Maintained growth forecasts for FY25 and expects double-digit Ebit and EPS growth for the year.
Revenue beat in Q1 was led by both India and international business.
The company sounded cautious about extrapolating from the slight recovery seen in North America and in BFSI.
With a strong base in Q1, the company is set to deliver reasonably strong margins in FY25, helping deliver double-digit Ebit.
Key concerns include soft deal wins in the quarter and FY25 growth supported by volatile regional markets.

Nuvama On TCS

Maintains a 'buy' rating on the stock and raised the target price to Rs 4,800 apiece from Rs 4,560 earlier, implying a potential upside of 23% from the previous close.
⁠Deal flows soft at $8.3 billion.
Earnings downgrade cycle for the sector is behind.
Deal wins will gradually convert into revenue in the coming quarters.
Management sounded positive as they see a recovery in US Banking and Financial Services and bottoming out of the retail vertical.
Marginally tweaks FY25E and FY26E earnings.
See TCS as a perfect large-cap proxy to play this upcycle.

Also Read: TCS Q1 Results: Margin Contracts, But Long-Term Forecast Maintained

CLSA On TCS

Maintains a ‘hold’ rating on the stock and increased the target price to Rs 4,007 apiece from Rs 3,990 earlier, implying a potential upside of 3% from the previous close.
⁠Growth largely led by ramp up of BSNL deal.
Margin slightly ahead of estimates due to lower subcontracting costs.
Demand commentary remains unchanged.
⁠Slightly increase revenue forecasts due to ramp up of BSNL deal.
Slightly lower margins due to pass through from BSNL contract.

Citi On Tata Consultancy Services

Reiterates 'sell' rating on the stock but raised the target price to Rs 3,645 apiece from Rs 3,555 earlier, implying a potential downside of 7% from the previous close.
Q1 revenue was higher due to India and regional markets.
The EBIT margin in line, subcontractor costs down 60 basis points.
Management commentary suggests market conditions unchanged.
Margin resilience needs to be watched.
Earnings-per-share estimates unchanged but roll forward to 26 times the FY26 estimates.
Ongoing pair trade — overweight on Infosys Ltd. and underweight on Tata Consultancy Services Ltd.

Also Read: Trade Setup For July 12: Nifty To Face Resistance At 24,460

Motilal Oswal On TCS

Reiterates 'buy' rating on the stock and a target price of Rs 4,660 apiece, implying a potential upside of 20% from the previous close.
Stable growth led by India geography and BFSI returns to growth.
Growth driven by BSNL's deal ramp-up. This and other large deals to cushion growth in FY25.
TCS is well-positioned to withstand the lukewarm macro environment.
Company able to maintain its industry-leading margin and demonstrate superior returns.
Target price implies a 30 times EPS for FY26.

Also Read: Stocks To Watch: TCS, HCLTech, Mahindra & Mahindra, Vodafone Idea

IIFL Securities On TCS

Retains 'reduce' rating on the stock and a target price of Rs 3,950 apiece, implying a potential upside of 1.2% from the previous close.
⁠Largely retains FY24–FY26 earnings estimates.
Marginally better-than-expected numbers.
Deal wins moderated due to timing of deal closures, but within guided range.
Management refrained from giving growth commentary.
Near-term demand volatility due to weakness in discretionary demand.
FY25 will be better than FY24.

UBS On ABB India

Downgrades stock from a 'buy' rating to 'neutral' and raises target price to Rs 9,100 apiece from Rs 8,830, implying a potential upside of 7.4% from the previous close.
Earnings have been upgraded 40% by consensus in the past 12 months.
Sees limited room for valuation re-rating as 30% earnings growth priced in.
Current valuations reflect upside-case earnings expectations.
Factors that will lead to upgrade to 'buy' include quarterly order run-rate beyond Rs 3,800 crore from mobility and robust margins in emerging portfolios in electrification.

Also Read: Stock Market Today: Sensex, Nifty Register Longest Stretch Of Weekly Gains In Nearly Seven Months