TCS share price rises 8% post Q4 earnings: Time to buy, sell or hold the stock?

TCS  share price rose in early trade today after IT firm reported a marginal dip in the Q4 net profit even as FY20 revenue rose 7.1 per cent. Revenue for FY 20 stood at Rs 1.57 lakh crore compared to Rs 1.46 lakh crore in FY19. Share price of TCS gained up to 8% to Rs 1,851.85 compared to the previous close of Rs 1,715 on BSE. The large cap stock opened 4.92% higher at Rs 1,800 today.

TCS stock has gained after three days of fall. It is trading higher than 5 day and 20 day moving averages but lower than 50 day, 100 day and 200 day moving averages. However, the stock has lost 15.26% in last one year and fallen 16.39% since the beginning of this year.

TCS share has gained 9% in last one month. The IT firm's market cap rose to  Rs 6.79 lakh crore  on BSE.

Wipro share price falls 6% on weak Q4 earnings

The Tata Group firm which is also the country's largest software exporter, reported a 2.8 per cent year-on-year rise in its net profit at Rs 32,340 crore for the financial year ended March 31, 2020, led by double-digit growth in life sciences and healthcare business.

TCS reported net profit of Rs 31,427 crore in the financial year 2018-19.

TCS reports slowest dollar growth in 10 years

TCS reported net profit of Rs 8,093 crore in Q4 compared to Rs 8,152 crore in the corresponding period of previous year. Revenue rose 5.1% to Rs 39,946 crore in last quarter against Rs 38,010 crore in Q4FY19.    

The stock was the  top gainer on both Sensex and Nifty. On  Nifty, the stock rose  up to 8%  to Rs 1,851.95.

Here's look at what investors should do after TCS announced its Q4 earnings .

Edelweiss Research in a note advised investors to hold the stock with a revised target price of Rs 1,708.

"We believe TCS' superior capabilities will help it emerge stronger from the current pain, low earnings visibility over the next 12 months compels us to cut our target multiple to 20 times from 22 times, the lowest percentage cut for the sector.

While the current crisis may seem as bad as great financial crisis, we believe Indian IT has made tremendous inroads into the mind space of organisations; they remain essential to transforming business and tech is no longer about mundane cost saving initiatives. We believe TCS along with other Indian large caps remains at the forefront of this and is sure to benefit after the current disruption passes. The stock trades at 20.9 times FY21E EPS and stock is fairly priced. We maintain 'HOLD with TP of Rs 1,708 against Rs 1,890 earlier."

TCS expects first two quarters to mirror 2008-09 recession, Q3 to usher in recovery

On Thursday, the stock closed 1.09% or 18 points lower at Rs 1,175 compared to the previous close of Rs 1,734 on BSE. TCS share price fell up to 3.28% to Rs 1,677 on BSE. It hit an intra day high of  Rs 1,762.90. The firm logged market cap of Rs 6.43 lakh crore ahead of its Q4 earnings announcement.

JM Financial in a report advised investors to hold the stock with a target price of Rs 1,820.

"In contrast to the cautious commentary from Wipro, TCS outlined a more balanced business outlook with hopes for a demand recovery by 3QFY21. While the near-term challenges are likely to be significant and broad-based across verticals - TCS admitted to a potential QoQ decline in 1QFY21 similar to post the 2008 Global Financial Crisis - its scale should help gain market share over the medium term.

A strong order booking (USD 8.9bn; highest in the last 8 quarters) in 4QFY20 should also help. The margin commentary was also measured; TCS hopes to exit FY21 with similar margins as 4QFY20 (25.1%, EBIT).  We have lowered our FY21/FY22 EPS estimates by 0.5%/3% to factor a tougher near-term outlook against  our earlier expectations leading to a revised Rs 1,820 price target (Rs 1,860 earlier)."