The Street celebrated Tata Consultancy Services (TCS) Q1 FY25 results, which surpassed analysts' predictions. Riding on the wave of this performance, Jefferies, Nomura, and Nuvama revised their rating and target prices upwards, signalling renewed confidence in the tech giant's prospects.
Jefferies upgraded TCS stock to 'buy' with a target price of Rs 4,615, Jefferies highlighted a return to growth in key verticals and markets, while Citi and Nuvama noted growth in certain segments, albeit with some caution about sustainability.
UBS maintained its 'buy' rating on TCS while raising the target price to Rs 4,600 per share. The brokerage noted that a strong earnings beat in the fiscal first quarter indicates a potential recovery.
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Jefferies and UBS target prices imply an upside of at least 18 percent over the previous closing price.
TCS announced its Q1 FY25 results on June 11 (post market hours), reporting a consolidated net profit of Rs 12,040 crore for the quarter, a decline of over 3 percent from the previous quarter. Revenue from operations increased by 2.2 percent quarter-on-quarter to Rs 62,613 crore.
According to estimates from 10 brokerage firms compiled by Moneycontrol, TCS’s revenue was projected to rise 1.6 percent quarter-on-quarter to Rs 62,190 crore, with net profit expected to fall 3.5 percent sequentially to Rs 11,999 crore.
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On July 11, shares of TCS closed 0.2 percent lower at Rs 3,902. In the past six months, TCS stock has gained 0.5 percent, underperforming the Nifty 50 which gained over 11 percent during the same period.
Brokerage firm Nomura took a 'neutral' stance on TCS shares, slightly raising its target price for it to Rs 3,860 per share from Rs 3,800. Despite the positive Q1 results, Nomura prefers Infosys and Wipro as top picks in the large-cap Indian IT services space.
Nuvama reiterated its 'Buy' call on TCS, raising the target price to Rs 4,800 per share from Rs 4,560. The brokerage views Q1 results as a solid start to what it terms a turnaround year.
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Despite the positive Q1 results, Jefferies and Citi pointed out that the current valuations might offer limited upside. Citi has maintained a 'Sell' rating on TCS, with a target price of Rs 3,645 per share, citing management's cautious commentary and the belief that it's too early to declare sustained growth.
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