Shares of Tata Consultancy Services Ltd. rose on Friday as the company reported better-than-expected earnings in the first quarter of the current financial year.
The software-technology giant's net profit declined 3.2% quarter-on-quarter to Rs 12,105 crore. However, the net profit number for the first quarter came higher than Bloomberg's estimate of Rs 11,959 crore.
Brokerages said that the catch-up rally for IT major's shares is on the horizon, but they remain wary as the management pointed out unchanged market conditions with the results announcement.
JPMorgan said a strong revenue beat should drive a catch-up rally and expects the stock to react positively. "We expect a consensus earnings upgrade of 1–2%, given the beat on revenues and earnings."
TCS Q1 FY25 (Consolidated, QoQ)
Revenue up 2.2% at Rs 62,613 crore versus Rs 61,237 crore (Bloomberg estimate Rs 62,128.4 crore).
EBIT down 3% at Rs 15,442 crore versus Rs 15,918 crore (Bloomberg estimate Rs 15,245.5 crore).
EBIT margin at 24.7% versus 26% (Bloomberg estimate 24.5%).
Net profit down 3.2% at Rs 12,105 crore versus Rs 12,502 crore (Bloomberg estimate Rs 11,959 crore).
TCS' stock rose as much as 2.86% in early trade to Rs 4,035.95 apiece on the NSE. It was trading 2.51% higher at Rs 4,022 per share, compared to a 0.44% advance in the benchmark Nifty at 9:33 a.m.
It has risen 22% in the last 12 months and 5.4 on a year-to-date basis. The relative strength index was at 57.
Out of 48 analysts tracking the company, 30 maintain a 'buy' rating, 10 recommend a 'hold,' and eight suggest 'sell', according to Bloomberg data. The average 12-month consensus price target implies an upside of 6.7%
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