Most analysts that track Tata Consultancy Services (TCS) have retained their cautious stance on the stock after the company's December quarter results just about managed to meet estimates on most fronts.

The management of TCS maintained its exit margin guidance for the current financial year at 25 percent, despite the figure marginally missing estimates for the December quarter.

For the quarter, the company reported revenue of Rs 58,229 crore, which was higher than the CNBC-TV18 poll of Rs 57,475 crore. In rupee terms, TCS reported revenue growth of 5.3 percent compared to the September quarter.

Brokerage firm Citi finds it difficult to see upside in the TCS stock given its valuations at 25 times financial year 2024 earnings. It asks whether revenue growth will follow the book-to-bill of 1.1 times on an order book of $7.8 billion. Book-to-bill stood at 1.35 in financial year 2022.

Citi has maintained its sell rating on TCS with a price target of Rs 2,990, implying a potential downside of close to 10 percent from Monday's closing price.

JPMorgan also believes that the near-term outlook remains cautious with deal wins being soft. At $7.8 billion, TCS' deal wins were at a four-quarter low. The firm also called TCS' current valuations to be unjustified given worsening macros and continued growth slowdown.

The brokerage has an underweight rating on TCS with a price target of Rs 3,000.

Nomura has one of the lowest price targets on TCS across the street. Its reduce rating on the stock is followed by a price target of Rs 2,850, implying a potential downside of 14 percent from Monday's closing price. The brokerage believes that TCS' growth will continue to lag Infosys citing low near-term visibility and no meaningful changes to earnings.

Also Read: TCS loses 2,197 employees and attrition remains above 21% in third quarter

Defying consensus on TCS is Bernstein, which has maintained its outperform rating with a price target of Rs 3,840, implying a potential upside of 16 percent from current levels. It called TCS' performance resilient as the company's qualified pipeline grew sequentially despite challenging macros. The firm remains positive on the stock and expects market share gains for scaled full services players.

Another brokerage that has maintained its positive stance on TCS is Motilal Oswal. While the brokerage expects growth constraints over the next two quarters, it sees TCS to be relatively insulated on the back of its strong deal backlog. It has largely maintained its earnings estimates with a price target of Rs 3,810.

Out of the 50 analysts that track TCS, 22 have a buy recommendation on the stock, 17 have a hold rating while 11 have a sell recommendation.

Also Read: TCS has paid a record dividend to its shareholders so far in the current financial year

First Published:Jan 10, 2023 8:16 AM IST