TCS Share Price: Since early morning trades, there has been intense buying interest in IT equities ahead of TCS Q3 earnings.
Faizullah Baig
Published Date
TCS Share Price: Shares of key IT companies including Infosys, HCL Tech, Firstsource Solutions, Tech Mahindra, and even TCS are up significantly from their Friday close. Shares of Infosys are up about 2.35 percent, those of HCL Tech are up over 3 percent, and those of Tech Mahindra are up today about 2.50 percent or more.
Even the price of TCS shares rose sharply on Monday, gaining almost 2.75 percent during the day.
On Monday, the Nifty IT index increased by more than 2.50 percent, fuelling rumors that TCS will provide positive guidance following the release of Q3 earnings.
The market has already discounted the muted to a negative review of the IT companies ahead of earnings season, according to stock market specialists. The market currently anticipates IT businesses’ guidance to range from flat to positive. As a result, IT stocks are soaring ahead of the TCS results. This may have started with today’s TCS Q3 reports.
They claimed that the Nifty IT index, which is currently trading in the 27,000 to 31,000 region, may turn strongly bullish once it clears the higher bar. On clearing this obstacle, they predicted that the index might rise in the near future to 37,000 levels.
However, they argued that during the early stages of the rally, purchasing interest will be seen in large-cap stocks, and later on, it will spread to mid- and small-cap IT stocks.
In response to a question on why IT stocks increased ahead of TCS’s third-quarter results, Ravi Singhal, CEO of GCL Securities, stated, “The Dalal Street has already been discounted following a muted to unfavorable preview before to the start of the results season.
The market is currently anticipating TCS to provide sideways to positive guidance ahead of its Q3 results, which could have a beneficial effect on the gross margin ratio of IT equities. If this occurs, we may anticipate that other IT behemoths like Infosys, HCL Tech, Wipro, TechM, etc. will follow suit. Therefore, a lot will depend on the kind of guidance TCS provides following the release of its Q3 results.”
Vice President of research at IIFL Securities, Anuj Gupta, discussed key Nifty IT index levels to watch “The Nifty IT index is fluctuating between 27,000 and 31,000. Only on the breaking of either side of the range can a bullish or negative trend in the Nifty IT index be expected.
However, there is less chance of a decline in IT equities because they are already in base-building mode following the start of the Russia-Ukraine crisis. Therefore, in the following sessions, one should view any decline in a high-quality large-cap IT stock as a buying opportunity.”
According to Ravi Singhal of GCL Securities, the surge would initially affect large-cap IT equities before gradually spreading to mid-cap and small-cap IT firms.
TCS Q3 Results: Net Profit and Revenue Increase Despite a Seasonally Weak Quarter and Growing EBIT
On Monday, the IT behemoth Tata Consultancy (NS:TCS) Services released its earnings results for the quarter ending in December 2022, announcing an increase in its consolidated net profit of 10.98% YoY.
In Q3 FY23, the company’s consolidated revenue increased 5.3% QoQ to Rs 58,229 crore, and its net profit increased 11% and nearly 4% sequentially to Rs 10,883 crore.
According to TCS’ management, cloud services, market share gains through vendor consolidation, and ongoing momentum in North America and the UK were the main drivers of the IT giant’s revenue growth, which increased 13.5% YoY in constant currency terms and posted strong growth in a seasonally weak quarter.
Rajesh Gopinathan, CEO & MD of Tata Group Major, stated that the company’s longer-term growth forecast remained positive as operational performance improved for the second straight quarter.
The operational margin (EBIT) of the large-cap business increased by 50 basis points to 24.5% in Q3 as a result of TCS securing contracts worth $7.5 billion during that time.
In addition to a special dividend of Rs 67/share of Re 1 apiece, the business has issued a third interim dividend of Rs 8/share for FY23.
“Increased productivity, currency support, and easing supply-side issues all contributed to our operating margin growth in the third quarter.
This offers us more assurance that we can increase profitability while maintaining our investment in developing innovative capabilities to support our growth and market share gains, according to Samir Seksaria, the company’s CEO.
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