TCS shares jump over 3% as Q3 earnings beat Street estimates. Should you buy?

economictimes.indiatimes.com:

Tata Consultancy Services (TCS) jumped over 3% to the day’s high of Rs 3,860.25 on the NSE after the brokerages remained upbeat on IT bellwether following its Q3 results wherein it beat revenue expectations even as the bottomline trailed Street view.

Morgan Stanley upgraded the stock to Overweight while raising its price target post the quarterly performance while Motilal Oswal and Nuvama reiterated their buy stance on the counter. Kotak Institutional Equities reiterated an ‘Add’ rating on TCS shares.

TCS on Thursday reported higher-than-expected revenue for the quarter ended December 2023, but the bottomline trailed expectations. India’s largest software service provider reported a 2% year-on-year (YoY) growth in consolidated net profit for the quarter to Rs 11,058 crore, and revenue increased by 4% to Rs 60,583 crore.

Also Read: TCS Q3 Results: Profit rises 2% YoY to Rs 11,058 crore; revenue up 4%

Here is what they recommend!

Morgan Stanley: Overweight | Target: Rs 4,240

Morgan Stanley upgraded TCS stock to 'Overweight' from an earlier equal weight stance and hiked the price target to Rs 4,240 from 3,900. In its post-earnings stock review, the brokerage noted resilience in its revenues with its Earnings Before Interest and Taxes (EBIT) margin reaching the 25% mark sooner than expected. The management commentary also turned slightly positive with indications of a likely pickup in growth rates, going ahead.
Though the stock underperformed its peers in 2023, its P/E is not cheap but the premium could be sustained if execution improves, the brokerage said.

Motilal Oswal: Buy | Target: Rs 4,250

Motilal Oswal has reiterated a buy stance on TCS with a target of Rs 4,250 after the company reported earnings which beat