Shares of Tata Consultancy Services Ltd. rose to an all-time high after India’s biggest software services provider’s quarterly profit rose and margin expanded, indicating signs of recovery from the disruptions stemming from the Covid-19 crisis. Analysts, too, remained bullish.
The company’s net profit rose 6.6% sequentially to Rs 7,475 crore in the July-September period, according to an exchange filing. While its margin expanded to 26.2% from 23.6% in the preceding three months, revenue growth in dollar terms was highest for the company in 24 quarters.
TCS’ board also approved a proposal to buy back up to Rs 16,000 crore worth of shares to reward stakeholders. It will repurchase 5.33 crore shares or 1.42% of the total paid-up equity, at Rs 3,000 apiece. Besides, the board approved a second interim dividend of Rs 12 per share.
While most analysts raised their earnings estimates of TCS for the next two financial years, they are concerned about its expensive valuations.
Of the 48 analysts tracking the stock, 20 have a ‘buy’ rating, 19 recommend a ‘hold’ and rest suggests a ‘sell’. The average of Bloomberg consensus 12-month price targets implies a downside of 5.9%.
Shares of TCS gained as much as 5.2% to hit an all-time high of Rs 2,877 apiece on Thursday. The stock is up for the ninth straight day, its longest winning streak on record.