TCS stock remains in base-building mode after hitting a 52-week low of $level of 2,962 per person in September 2022. However, after the announcement of Q3 fiscal year 2023 results, TCS stock price had some upward movement fueling speculation about the IT giant has bottomed out and is ready for a fresh rally. Motilal Oswal believes the same as the broker said that the ‘defensive giant could shine brighter than its coin in 2023’ and rated $Target 3,950 per share by 20223.
“We believe that TCS, among our IT services, is best positioned to sidestep short-term censorship in technology spending, due to macroeconomic stress in developed economies. With technology spending shifting towards cost efficiency (vs focus on transformation over the past two years), TCS revenue growth is expected to outperform its peers (2024). is 9.2% YoY CC in USD vs large cap coverage average of 8.5% YoY) due to its industry Leadership in cost optimization and robust order books,” the broker said.
Motilal Oswal’s research report published on January 31, 2023 states that better TCS performance is expected to boost the company’s profitability, leading to 20% growth in NPAT compared to TCS. with the same period in a difficult year.
Regarding TCS’ margins, the brokerage report said: “With easing supply pressure and additional costs, we expect TCS to improve EBIT margins by 135 basis points over the period. fiscal 2023-25 after a 170 basis point drop in the previous two years.While cost-effective projects often dictate lower valuations, TCS will benefit from the addition of a large number of new employees (155k in the last 1.5 years, 30% of the workforce in fiscal year 21), improved utilization, and strong operating leverage . More importantly, it has a best-in-class record of cost-effective task management and strong execution, which will help the company generate better profits. We expect the company to register a pre-tax profit margin for fiscal year 2024/2025 of 24.8/25.6%, respectively.
Regarding its recommendation to investors for positioning regarding TCS stock, Motilal Oswal’s research report said: “We maintain a positive view on TCS. Their TP (Target Price) I am $3,950 implies an EPS of 29x FY24E/25xFY25, with an 18% upside potential. We reiterate our Buy rating.”
Disclaimer: .the views and recommendations given above are those of individual analysts or brokerage firms, and not those of Mint. We advise investors to check with certified professionals before taking any action investment decisions.
Know your inner investor
Do you have nerves of steel or do you lose sleep over your investments? Determine your investment method.
catch them all Business newsletter, Market News, Hot news Events and Latest news Update on Live Mint. Download Mint News Application to get Daily Market Updates.
