Shares of Tata Consultancy Services (TCS) jumped 3% to Rs 3,979.90 on BSE during intraday trading on Monday after India’s largest information technology (IT) firm said its Board of Directors would consider a buyout proposal on Wednesday January 12, 2022. The stock traded near its all-time high of Rs 3,990 hit on October 8, 2021.
TCS’s board of directors was originally scheduled to meet on January 12 to approve and take note of the company’s financial results for the third quarter and the nine months ending December 31, 2021.
Over the past month, the TCS has outperformed the market, jumping 8%, compared to 2.3% for the S&P BSE Sensex. However, in three months, it underperformed with a decline of 0.41%, against a gain of 0.13% in the benchmark.
at 9:33 am; The TCS rose 1.1% to Rs 3,989.40 on BSE. In comparison, the S&P BSE Sensex rose 0.55% to 60,071 points. The box office saw huge trading activity with 2.4 million shares changing hands on the NSE and BSE within the first half hour of trading.
In the past, TCS had two takeover bids of approximately Rs 16,000 crore. In 2020-2021, TCS had bought back more than 53.3 million shares as part of the offer for Rs 3,000 each. In 2018, TCS bought back 76.1 million shares at Rs 2,100 per share.
Commenting on earnings expectations, Motilal Oswal Financial Services said in a report, âThe IT services industry is expected to experience accelerated growth from the multi-year cloud upgrade cycle. TCS is among the best placed to benefit from this increase. strong organic capacities, a diversified presence, a dynamic of successful transactions and solid staff additions. It should also benefit from its superior ability to manage the challenges of the talent supply. “
The brokerage firm expects TCS to benefit from the sustained growth given its strong organic capabilities, diverse vertical and geographic presence, successful momentum and large workforce.
âTCS should continue to generate revenue momentum, but supply pressure would restrict margin expansion. TCS is expected to register 2.7% growth in constant currency QoQs, driven by the continued improvement in demand for BFSI, healthcare and retail, the acceleration of digital technologies, the rise in the power of transactions, âsaid ICICI Securities.
In addition, headwinds between currencies would lead to 2.0% quarter-on-quarter revenue growth in dollars. In terms of rupees, QoQ revenues are expected to increase 3.2 percent. EBIT margins are forecast to increase by 20 basis points in QoQ to 25.2 percent, driven by the flattening of the employee pyramid and greater offshoring. PAT is expected to improve QoQ by 3.3%, mainly due to better operating performance. Supply side challenges and attrition from investors, margin outlook, transaction dynamics, outsourcing costs and IT budgets CY22, the brokerage company added in the earnings overview.