Buy Tata Stock For Good Return, Rs 75/Share Dividend: Motilal Oswal Bullish After Q3 Result

Leading brokerage firm Motilal Oswal has recommended investors to buy Tata Group stock, Tata Consultancy Services (TCS) with a target price of Rs 3810 apiece. The current market price of TCS is Rs 3259 apiece. If you buy TCS Shares now, you will get 17% return along with Rs 75 per share dividend. TCS declared an interim dividend of ₹8 and a special dividend of ₹67 per Equity Share of ₹1 each.

TCS has delivered INR PAT growth of 8.3% in the 9MFY23. It generated FCF of INR102b during the quarter and had INR 669b in Cash and Investments as at 3QFY23. Check key details below:

1. TCS Stock Outlook & Return

The last trading price of the stock is Rs 3259 apiece with intraday dip of over 1%. The stock's 52-week high is Rs 4045 apiece and 52-week low is Rs 2926 apiece. The stock has given 47% return in last 3-years and 132% return in last 5-years.

The large cap stock has declined 16% in last 1-year. The stock has rallied nearly 5% in last 3-months. TCS has a market capitalisation of Rs 11,92,832.45 crore.

2. Good Q3 With Topline Beat And In-Line Margins

Revenue (CC) grew 2.2% QoQ. INR EBIT/ PAT rose 17%/11% YoY. EBIT margin of 24.5% (up 50bps QoQ) was in line with our expectations. Supply pressure is starting to come down.

The net employee count came down by 2.2k associates (first decline since Q1FY21). The company reported deal wins of USD7.8b (down 3.7% QoQ/up 2.6% YoY, book-to-bill ratio at 1.1x), in line with our expectations.

3. Valuation And View

According to Motilal Oswal, "Increase in interest rates, slow economic growth, and elevated geo-political tensions have adversely impacted the macro environment and raised concerns over IT spends.

Given TCS's size, order book, and exposure to long duration orders, and portfolio, it is well positioned to withstand the weakening macro environment and ride on the anticipated industry growth. We maintain our positive stance on TCS. Our TP of INR3,810 implies 28x FY24E EPS, with a 15% upside potential. We reiterate our Buy rating."

4. About TCS

Tata Consultancy Services is an IT services, consulting and business solutions organization that has been partnering with many of the world's largest businesses for the past 50 years.

A part of the Tata group, India's largest multinational business group, TCS has over 592,000 of the world's best-trained consultants in 55 countries. The company generated consolidated revenues of US $25.7 billion in the fiscal year ended March 31, 2022, and is listed on the BSE (formerly Bombay Stock Exchange) and the NSE (National Stock Exchange) in India, according to its official website.

Disclaimer

The stock has been picked from the brokerage report of Motilal Oswal. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.