TCS share price in focus post Q3 results, dividend announcement

Stock Market Today: Tata Consultancy Services (TCS) share price remains in focus today post Q3 results and  dividend announcements.

TCS Q3 Results FY25 The Indian IT behemoth Tata Consultancy Services (TCS) had reported a 12% increase in its December quarter consolidated net profit, which came to ₹12,380 crore, from ₹11,058 crore during the same period the previous year.

Jefferies maintains estimates, says valuations attractive

TCS’s 3Q results were in line with estimates of Jefferies India Pvt ltd. Jeffereis analysts have said that  but they were encouraged by management comments on early signs of revival in discretionary spends (esp. in North America BFSI) and healthy order book. Moreover, ramp-down of BSNL deal may provide scope to improve margins. Jefferies maintains its earnings estimates and expect 9% Earnings per share growth ( CAGR ) over FY25-27. At 27 times price to earnings  valuation is attractive and factors in the near-term growth headwinds, said Jefferies India Pvt Ltd 

Other Analysts views

Despite a seasonally weak quarter, the IT behemoth reported a decent uptick in its financials on a year on year basis. However, the company failed to meet the street estimates on all fronts, albeit marginally, said Sagar Shetty, Research Analyst, StoxBox. The company could not attain its aspirational margin range of 26-28%, which now seems even more aspirational to reach as the fiscal almost ends. A significant tailwind during the quarter would be the healthy TCV (total contract value) of $10.2 billion (up 26% YoY), which underscores a healthy revenue visibility as the scenario of deal leakages going ahead is unlikely as per Shetty.

Win themes across key deals involved manufacturing IT operations, managed services, Operating model transformation, vendor consolidation, CX transformation, legacy modernization, and Gen AI-led transformation. Revival in CBG (Consumer Business Group) and BFSI was key, with growth led by growth markets. The declining trend in the TMT segment continues, with Life sciences also joining the pack. With the revival in discretionary spending in some verticals, we remain optimistic about the company’s outlook. Management’s view on the demand environment following the US administration change, outlook on deal pipeline and margin guidance would be key.

Anshul Jain, Head of Research at Lakshmishree Investment and Securities- With a focus on stabilizing attrition and optimizing margins, the firm remains poised for sustained long-term growth in the competitive IT landscape. TCS, India’s largest IT services exporter, posted a net profit of ₹12,380 crore in Q3 FY25, a 12% year-on-year increase and a 4% rise quarter-on-quarter. Revenue for the quarter stood at ₹63,973 crore, reflecting a slight 0.4% decline from the previous quarter but a 6.13% jump compared to last year. The weakness in the Indian National Rupee (INR) against the US dollar (USD) also played a role in revenue slippage. I expect some buying buzz in TCS share in every dip post-Q3FY25 results, said Jain

Technical View

TCS’s share price has made a strong base at ₹3,980 apiece, and the stock looks strong on the technical chart pattern., So, TCS shareholders are advised to hold the scrip for the short-term targets of ₹4,150 and ₹4,250, said Mahesh M Ojha, AVP — Research at Hensex Securities. Fresh investors can also buy TCS shares at the current market price, maintaining a strict stop loss at ₹3,980 per share, he added

Dividend announcement

TCS declared a third interim dividend of Rs10 and also and special dividend of ₹66 per share of Rs1 face value each of the company. This amounts to total dividend of ₹76 per share.

While the record date for this purpose  of dividend distribution is set on Friday, January 17, 2025, the third interim dividend and the special dividend shall be paid to to the equity shareholders of the company.on Monday, February 3, 2025.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.