Should you buy TCS share post Q1 earnings? Here's what brokerages say

TCS share was trading flat in early trade after the IT giant reported earnings for quarter ended June 2021.

TCS reported a 28.5 per cent rise in June quarter net profit at Rs 9,008 crore compared to Rs 7,008 crore profit in the same period last year. However, TCS' net profit on QoQ basis, however, declined 2.6 per cent.

The software major called out the domestic business as a drag which restricted its overall growth because of the second wave of COVID-19.

 At 10: 48 am, the share was trading 0.05% higher at Rs 3257 on BSE.

TCS share trades higher than 50 day, 100 day and 200 day moving averages but lower than 5 day and 20 day moving averages.

The share has risen 48.41% in one year and gained 14% since the beginning of this year. Market cap of the firm stood at Rs 12.07 lakh crore on BSE.

The large cap stock hit 52 week high of Rs 3399 on June 25, 2021 and 52 week low of Rs 2,125.85 on July 24, 2020.

Total 0.92 lakh shares changed hands amounting to turnover of Rs 30.04 crore on BSE.

TCS' consolidated revenue from operations rose 18.5 per cent to Rs 45,411 crore. Revenue in dollar terms stood at $6.154 billion, while total contract value stood at $8.1 billion.

TCS' operating margin dropped primarily due to a salary hike announced in the previous quarter whose full impact was seen in Q1 FY22. TCS board has declared an interim dividend of Rs 7 per equity share of Re 1 each.

Here's a look at how brokerages reacted to the IT firm's Q1 earnings.

Edelweiss in a note said," TCS  delivered  decent  numbers except  for  the India  business,  which suffered  from partial lockdowns. On  the  whole,  demand  for  digital  transformation  is extremely strong. In our view, a robust deal pipeline along with exemplary execution will drive earnings growth over coming quarters.The stock is tradingat 31.3x FY22E. Maintain 'BUY/SO' with an unchanged target price of  Rs 4,176 (40x Q3FY23E)."

Motilal Oswal holds a neutral stance over TCS share and has given a target price of Rs 3,400.

"We have marginally changed our EPS estimates. While we continue to be positive on the company, we remain Neutral on the stock given the elevated multiples. Our target price of  Rs 3,400 implies 27 times FY23EEPS," the brokerage said.