TCS shares advance after Q4 margin expansion but brokerages divided

TCS share price: After the technology major Tata Consultancy Services (TCS) reported mixed Q4 results with better margins, the IT stock gained over 1.5 per cent in an overall weak market in early trade to Rs 4,064.2 apiece on Monday, April 15.

Major foreign brokerages are divided in their views on the Tata group IT stock.

After market hours on Friday, the IT technology services provider recommended a final dividend of Rs 28 per share, reported record deal wins, and registered a 100 basis-point sequential increase in operating margin as it reported its Q4 results.

TCS results review | Here's what market wizard Anil Singhvi says on Q4 results

• Numbers a mixed bag
• Margin strong, TVS positive
• Revenue slightly below estimates
• Decreasing headcount a negative
• Management commentary stable
• A higher start may lead to profit-taking
• Futures have support at Rs 3,980, Rs 3,955 and Rs 3,915
• Higher levels for futures at Rs 4,045, Rs 4,075 and Rs 4,110

Here are the key takeaways from Tata Consultancy Services' Q4 results:

Revenue: In rupee terms, TCS reported a consolidated revenue of Rs 61,237 crore for the January-March period, up 1 per cent on a quarter-on-quarter basis.

In US dollar terms, the figure rose to $736 crore from $728.1 crore in the December 2023 quarter—a rise of 1 per cent. 

EBIT: The company posted a 5 per cent QoQ increase in EBIT, or earnings before interest and taxes, to Rs 15,918 crore. 

Operating margin: The margin saw a rise of 100 basis points (bps) during the quarter under review from 25 per cent to 26 per cent. Read more key takeaways from TCS's Q4 results

Management Outlook

Commenting on the results, K Krithivasan, Chief Executive Officer (CEO) and Managing Director (MD), TCS, said, “We are very pleased to close Q4 and FY24 on a strong note with the highest ever order book and a 26% operating margin, validating the robustness of our business model and execution excellence. In an environment of global macro uncertainty, we are staying close to our customers and helping them execute their core priorities with TCS’ portfolio of offerings, innovation capabilities, and thought leadership.”

Should you buy, sell or hold TCS shares post Q4 results?

Prashanth Tapse, Senior VP (Research), Mehta Equities, said, “TCS reported Q4 results that exceeded market expectations, with a focus on strong order inflow. Operating profit (EBIT) growth slightly surpassed forecasts, but revenue growth remained flat compared to the previous quarter. Despite concerns about a challenging environment, TCS outperformed IT peers following Accenture's guidance downgrade."

While there were weaknesses in revenue from the BFSI segment and North American region, the IT major's overall performance aligned with expectations, especially with a record-high order book for Q4FY24. Investors are now looking to Infosys' upcoming results on April 18 to gauge the IT sector's recovery status.

"Technically, TCS stock is trading between Rs 3,900 and Rs 4,025, and a breakout above Rs 4,025 could drive the stock towards Rs 4,200 and Rs 4,250. A strong support level is seen at Rs 3,900 post-positive results,” Tapse added.

Catch the latest stock market updates here. For all other news related to business, politics, tech and auto, visit Zeebiz.com.