TCS gains 2% to hit 10-week high; stock nears all-time high

The company is scheduled to meet on Monday, April 11, 2022 to consider financial results for the quarter and full year ending March 31, 2022.

Shares of Tata Consultancy Services (TCS) hit an over 10-week high of Rs 3,835.50, up 2 per cent on the BSE in Tuesday’s intra-day trade. The stock quoted higher for the third straight day, gaining 4 per cent during the period. It was trading at its highest level since January 24, 2022 and is just 5 per cent away from a record high level of Rs 4,045.50 touched on January 18, 2022.

On March 31, 2022, the information technology (IT) bellwether announced that the board of directors of the company would meet on Monday, April 11, 2022 to consider financial results for the quarter and full year ending March 31, 2022.

The company on Monday, April 4, informed that it has signed a material multi-year contract with a large American company expanding its long-standing partnership to accelerate their cloud transformation journey and transform their technology landscape into a modern hybrid cloud stack for greater agility, flexibility, and improved operational resilience.

Meanwhile, last month, TCS had concluded its Rs 18,000-crore share repurchase programme, its fourth since 2017. The company had bought back 40 million equity shares through the buyback offer. Post the buyback, the promoters and promoter group company’s stake in TCS increased to 72.30 per cent from 72.19 per cent.

TCS is one of the leading IT service providers with a presence in BFSI, communication, manufacturing, retail & high tech. and consistent organic revenue growth and industry leading margins (>25 per cent).

TCS is a key beneficiary of multi-year growth (15-20 per cent) in digital technologies. "There would be short term margin pressure but we believe that since now clients have been acknowledging the cost pressure and are receptive about price hikes in the deals, it would mitigate any short term impact on margins", said ICICI Securities.

The company believes it is making investments in the areas of future technologies i.e. contactless payments, battery management software for electric vehicles, etc, which will help it to participate in larger deals, going forward, the brokerage said. It expects the stock to eventually challenge its lifetime highs in coming months with a target of Rs 4,070.

TCS remains best positioned to benefit from the long term structural tailwinds in tech services and should see a relative pickup in growth as the base effect and increased aggression aid it.