INSUBCONTINENT EXCLUSIVE:
NEW DELHI: India's leading IT firm TCS jumped 5 per cent on Friday to hit a new all-time high on solid quarterly earnings as the company
beat Infosys with a faster dollar-denominated revenue growth for 2017-18.
The stock rose 5 per cent to hit a fresh peak at Rs 3,357 on the
BSE as the Q4 show beat Street expectations
It cut down gains and traded 3 per cent higher at Rs 3,286.50 at 9.24 am
Experts said while the numbers are healthy, upside looks limited at the counter.
The stock trades at a premium of 30 per cent to Infosys
valuation, HDFC Institutional Equities said
Historically, the Tata Group stock has traded at a historical 12 per cent premium over the second-largest IT firm.
The stock is fairly
valued at 19.3 times FY20E earnings, the brokerage said, giving a neutral rating to the stock.
"With robust deal wins and green-shoots in
BFSI, there is definite possibility of double-digit revenue growth
With growth acceleration, scale-up in digital and currency support, margins are ready for uptick as well, implying return of double-digit
revenue/earnings growth after 3 years
Bonus share and 80-100 per cent FCF distribution is the icing on the cake," said Edelweiss Securities.
The prevailing valuations though
offer limited upside, the brokerage said, adding that it does not see downside to the stock despite high multiples because of sectoral
tailwinds and high cash returns.
Foreign brokerage CLSA meanwhile has raised target for the stock to Rs 3,700, from Rs 3,250
Jefferies has maintained 'Hold' rating on the stock with a target of Rs 3,200
HSBC too has maintained 'Hold' on the stock, but has upped its target price to Rs 2,950, from Rs 2,630.
The largest Indian IT firm by sales
on Thursday reported a 4.48 per cent year-on-year (yoy) rise in consolidated net profit at Rs 6,904 crore for the March quarter
The number topped Rs 6,812.5 crore profit estimate by analysts in an ETNow poll
The board has approved a bonus issue of equity shares in 1: 1 ratio
The outsourcing firm has also announced a final dividend of Rs 29 per share
The Tata Group company said all industry verticals -- with the exception of BFSI -- grew above the company average, with three verticals
Growth was led by the energy and utilities vertical (up 33.7 per cent), travel and hospitality (25.4 per cent) and life sciences and
healthcare (12.6 per cent)
A higher employee addition in the fourth quarter compared with the previous three quarters, sustained client addition, fast-growing digital
business, and a tight control over operating profitability may help TCS retain the premium valuation.
