Brokers optimistic about TCS and HCL Tech
Brokers optimistic about TCS and HCL Tech
The results session has begun, and the information technology businesses that hold the largest market share are approaching the beginning of the innings with a cautious mindset. For the first quarter of the company’s fiscal year 24, TCS revealed that its sales increased by 13% year-over-year (YOY), reaching 59,381 crore.
If we look at the data assuming that the value of each unit of money has remained the same, we see that the increase in revenue was just 7%. To reach a total of Rs 11,074 crore, the consolidated earnings of the company experienced a year-over-year increase of 16.84%. When compared to the same time period the year before, it was Rs 9, 478 crore. In terms of margins, the EBIT margin decreased from 24.49% in the prior quarter to 23.2% in the most recent quarter.
This change occurred in the most recent quarter. The increase in salaries is believed to be a significant element that led to the fall in margin.
The fact that the company is putting a lot of attention on developing technologies like generative artificial intelligence gives it reason to be confident about its long-term prospects, despite the fact that it may face difficulties in the very short term. The fundamental goal of the organisation is to advance to a higher level of expertise in the field of generative artificial intelligence.
The rate of deal flow is significant, as reported by the brokerage house Nuvama, and the company believes that growth will resume in FY25 for the entire sector. A buy recommendation has been issued for the stock, and the brokerage firm has projected that the stock would reach a price of Rs 4,000 in the near future. Additionally, a buy rating was issued by Motilal Oswal, and their price goal was determined to be Rs 3,790.
HCL Tech, another major player in the business, has disclosed its results, and regrettably, they are not encouraging in any way. Its consolidated net profit improved by 8% on a year-over-year basis to come in at Rs 3,534 crore, and its consolidated revenue expanded by 12% on a year-over-year basis to come in at Rs 26,296 crore; nevertheless,
both of these metrics fell short of the expectations of the market. Its consolidated revenue increased by 12% on a year-over-year basis to come in at Rs 26,296 crore. The EBIT of the company dropped by 120 basis points quarter over quarter, bringing it down to 17%. As a result of the disappointing results, the company’s capability of meeting the guidance numbers for FY24 has been brought into question. On the other hand, brokerages have not altered their buy ratings in any way.
Both Motilal Oswal and Nuvama Institutional Equities have given their clients the recommendation to buy the stock, with Motilal Oswal expecting that the share price would reach 1,280 rupees and Nuvama Institutional Equities projecting that the share price will reach 1,300 rupees.
The information technology industry is facing headwinds as a result of global economic uncertainty and a decline in discretionary expenditure by enterprises on activities linked to information technology. Both of these factors are contributing to the current state of the industry. However, it is projected that the industry will expand very well over the long haul because there is a solid pipeline and corporations appear to be putting a substantial lot of their attention on generative AI.
This is the reason why it is expected that the sector will grow quite well over the long run. Despite this, companies all over the world are looking for ways to modernise their business processes and make the shift to the Industry 4.0 standard. It is expected that as additional organisations involved in information technology reveal their findings, a more accurate picture will become available.
