Brokerage Reports on TCS: JP Morgan Sets Highest Target at Rs 5,100 (Buy); Investec Lowest at Rs 3,620 (Sell)

After announcing its Q2 FY24-25 results, TCS received mixed opinions from brokerage houses. While JP Morgan maintained an overweight rating, Citi lowered its target price and recommended selling.

In the second quarter of FY 2024-25, Tata Consultancy Services (TCS), a leading IT firm from the Tata Group, reported an 8% rise in revenue and a 5% increase in net profit. Along with this, the company announced a dividend of ₹10 per share, with a record date set for October 18.

On Thursday, TCS shares fluctuated between a high of ₹4,293 and a low of ₹4,198, closing slightly down at ₹4,227 Following these results, various brokerages issued their recommendations on the stock.

CITI View on TCS: Sell Rating with 7% Downside

Citi has downgraded its target price for TCS to ₹3,935, projecting a 7% downside. The brokerage gave a “Sell” rating, citing that TCS’s EBIT was 4% below estimates, while the EPS forecast was cut by 2%, falling significantly short of market expectations.

HSBC Opinion on TCS: Buy Rating with 6.7% Upside

HSBC has given TCS a target price of ₹4,540, forecasting a 6.7% upside. The brokerage maintains a “Buy” rating, noting a slow recovery in demand during Q2, especially for discretionary projects. Despite this, HSBC remains optimistic about TCS’s long-term potential.

CLSA’s Recommendation on TCS: Hold Rating with 3.1% Downside

JP Morgan Take on TCS: Overweight Rating with 21% Upside

JP Morgan has set a target price of ₹5,100 for TCS, indicating a 21% upside. The brokerage has given an “Overweight” rating, expecting gradual improvement in the US BFS and UK banking sectors, even though TCS’s international business remains weak post-COVID.

CLSA’s Recommendation on TCS: Hold Rating with 3.1% Downside

CLSA has set a target price of ₹4,094 for TCS, indicating a 3.1% downside. The brokerage maintains a “Hold” rating, highlighting that the faster-than-expected BSNL deal led to increased costs, putting pressure on margins due to higher pass-through expenses.

Investec on TCS: Maintains Sell, Raises Target Price to ₹3,620

Investec has kept a “Sell” rating on TCS, increasing its target price to ₹3,620 from ₹3,586. The brokerage notes continued near-term uncertainty, with TCS facing client-specific challenges in the Life Sciences and Healthcare sectors as large clients reduce the scope of major transformational projects. Additionally, the manufacturing segment has been hit as clients cut spending due to supply chain issues. Retailers have also reduced discretionary spending in response to weak consumer demand, with future spending depending on a strong holiday season. Investec has cut its FY25 EPS estimate by 4.1%, driven by a 90 bps reduction in EBIT margin forecasts.