Shares of Tata Consultancy Services Ltd (TCS) have delivered flat returns in the last two years. TCS stock is down 3% during the period. However, the Nifty IT index has lost 8.30%, signaling a slump in investor sentiment in the IT sector stocks since October 2021. TCS’ peers such as Infosys shares and Wipro shares lagged behind with losses of 12.71% and 36.70%, respectively, during the last two years.
The fall in the IT sector stock came after constant currency (CC) revenue growth came in at a flat note in the Q2 earnings announced on October 11. Constant currency growth came in at 0.1 per cent sequentially.
ICICI Securities has downgraded the TCS stock to hold after its Q2 earnings.
"Due to a cut in our revenue growth assumptions, we trim our FY24-26E EPS estimates by 3-5% and lower our 12-month target price to Rs 3,708 (vs prior Rs 3,869), implying 3% potential upside. Hence, we downgrade the stock to HOLD (from Add) and foresee time correction in TCS' stock price pending broader macro recovery, signs of which remain elusive at least over the next 6-9 months," the brokerage said post Q1 earnings.
Aditya Gaggar, Director of Progressive Shares believes long-term target for the TCS stock is Rs 4,500 as per technical analysis.
"TCS is in a secular uptrend with a higher top higher bottom formation. After registering an all-time high of Rs 4043 in Jan 2022, the stock went into a sideways correction due to the known factors but recently it has given a breakout from a Symmetrical Triangle Formation (Monthly chart), which was confirmed with a positive crossover in MACD and ADX while the lower time frame also boosted the confidence by giving a breakout from the Cup and Handle formation (Weekly chart). As per the triangle breakout, the long-term target is Rs 4,500 while in the short to mid-term one can expect the target of Rs 4,000," said Gaggar.
BNP Paribas sees a 13% upside in the TCS stock post Q1 earnings. It has assigned a target price of Rs 4080 to the IT stock against the previous target of Rs 4,200.
"TCS is confident of further margin expansion with cost reduction, lower sub-contracting and better utilisation as key levers. We think the continuation of strong deal wins shows TCS’ strength in cost- optimisation projects. That said, we see growth recovery to start first at Infosys, helped by recent mega deals, and is now our top pick," the French financial services firm said.
On the outlook of the TCS stock, Abhijeet from Tips2trades said, "TCS looks bearish on the daily charts with strong resistance at Rs 3610. A daily close below the support of Rs 3551 could lead to a target of Rs 3445 in the near term."
TCS shares slipped 1.97% intraday to Rs 3,539 on Thursday against the previous close of Rs 3,610.20. They ended 1.88% lower at Rs 3542.25 on BSE. Market cap of the firm stood at Rs 12.96 lakh crore on BSE.
In terms of technicals, the relative strength index (RSI) of the TCS stock stands at 49.4, signaling it's trading neither in the overbought not in the oversold zone. TCS shares are trading lower than the 5 day, 10 day, 20 day but higher than the 50 day, 100 day, 150 day, 200 day moving averages.
The IT stock has risen 14.24 per cent in one year and risen 8.64 per cent since the beginning of this year.
The share opened lower at Rs 3585 against the previous close of Rs 3610.20. Total 2.06 lakh shares of the firm changed hands amounting to a turnover of Rs 73.11 crore on BSE. The share hit a 52-week high of Rs 3680 on October 9, 2023 and a 52-week low of Rs 3,053.30 on October 13, 2022.
Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.
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