TCS shares surge over 4% on strong Q1 show, lifting D-Street to fresh record highs

Jefferies upgraded the stock and raised its price target, while other foreign peers CLSA and JPMorgan maintained their ratings but upgraded their price targets. Among domestic analysts, Nuvama also increased the target price.

TCS reported a 9% year-on-year (YoY) growth in its June quarter net profit at Rs 12,040 crore, compared to Rs 11,120 crore profit reported in the same quarter last financial year. However, consolidated profit for the period stood at Rs 12,105 crore. The profit was higher than the Street estimate of Rs 11,900 crore.

The company's revenue from operations stood at Rs 62,613 crore, a 5.4% uptick over the Rs 59,381 crore posted by the company in the same period last year.

Here’s what top brokerages recommend:

Jefferies on TCS: Buy | Target: Rs 4,615
Jefferies has upgraded the stock to 'Buy' from 'Hold' and hiked the target price to Rs 4,615 from Rs 4,030. It comes on the back of beating the estimates of the US brokerage. It sees the return to growth of its key verticals/markets.
Net hiring was at a seven-quarter high, reflecting emerging signs of revival, Jefferies said. TCS offers value relative to Nifty as its current PE premium is below its 5-year average.

CLSA on TCS: Hold | Target: Rs 4,007
CLSA has maintained a 'Hold' rating on TCS and hiked the target price to Rs 4,007 from Rs 3,990 it had given earlier. It said that the largest Indian IT company reported a broad-based revenue growth across industry verticals, with BSNL holding the key. EBIT margins were slightly ahead of its estimates. The GenAl pipeline is growing but still insignificant to make a dent in financials, it noted.

JPMorgan: Overweight | Target: Rs 4,600
JPMorgan has maintained its 'Overweight' stance on the counter and hiked the target price to Rs 4,600 from Rs 4,500. JPMorgan noted a rising momentum in the company despite sluggish demand which it said is a cause for minor joy. TCS' Q1 earnings were a "clean" beat on revenues while the margins were in-line. It highlighted a status quo on demand environment albeit a momentum pick-up. The company has its margin levers in place to see expansion.

Nuvama: Buy | Target: Rs 4,800
Nuvama called its June quarter results a "solid start to the turnaround year" as it maintained a buy view on the counter and raised its price target to Rs 4,800 from an earlier target of Rs 4,560.

"TCS reported solid Q1FY25 results. Revenue grew 2.2% CC QoQ to $7,505 million, above our and Street’s estimate of 1.4% CC QoQ growth," Nuvama said in a note. "Management sounded positive as they see a recovery in US-BFS and bottoming out of the retail vertical. They, however, held back from guiding for the sustainability of the momentum due to uncertain macro," the note added.
"We are introducing FY27 estimates and rolling forward our valuation to 27x Sep-26 PE," Nuvama said.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)