TCS share price jumps over 2% ahead of Oct-Dec quarter results; large deal wins, outlook on margins eyed

TCS share price jumped over 2 per cent to Rs 3,098.35 apiece today on BSE ahead of October-December quarter earnings. Earlier this week, Tata Consultancy Services stock price hit a 52-week high of Rs 3,114.45 per share. The Information Technology (IT) sector has been among one of the best performing sectors in FY21. The Nifty IT index has surged nearly 2 per cent to 25,727.10 levels. According to an analyst, generally, Q3 is a slack quarter for IT companies. AR Ramachandran, Co-founder & Trainer, Tips2trades told Financial Express Online that this time, investors are expecting the best quarterly performance from TCS along with other companies like Infosys, HCL Technologies and Wipro with dollar revenue growth of over 3% as against 1%.

According to Suyog Kulkarni, Senior Research Analyst, Reliance Securities, Nifty IT is likely to enjoy premium valuation versus broader market, driven by mid-term growth visibility, stable margins and consistent cash return policy.

Analysts at JM Financial Services expect a 2.3 per cent sequential growth with a 50 bps cross-currency gain. “We are building in a sequential EBIT margin contraction of 80 bps due to wage increments implemented from Oct 1 and slight INR appreciation. According to the domestic brokerage firm, key things to watch out for would be large deal TCV, outlook on CY21 client spending, and outlook on margins over the medium term.

Ramachandran also said that technically, if earnings remain as estimated, then he believes that it has been factored in the stock price. “Investors are advised to book profits on every rise,” he said.

From the 52-week low of Rs 1,504.40 apiece, TCS stock price has more than doubled, rising 106 per cent. Analysts at ICICI Securities expect Indian IT sector to deliver strong sequential revenue growth led by fewer-than-usual furloughs, and residual recovery from Covid decline over H1CY20. It also believes that product-related seasonality/large deal ramp-ups too should help in some cases and margins may remain stable.

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RIL share price gains 1.5% today after Reliance-BP start gas production from Asia’s deepest project

Reliance Industries Ltd (RIL) share price gained 1.5 per cent to Rs 2,022 apiece in the morning deals on BSE today, taking the total market capitalisation to Rs 12.74 lakh crore. On Friday, after market hours, Mukesh Ambani-led Reliance Industries and BP announced the commencement of gas production from an ultra-deep-water gas field in block KG D6 R-Field of Krishna Godavari basin. In another development, the oil-to-telecom conglomerate will set up the ‘Greens Zoological Rescue and Rehabilitation Kingdom’ in Jamnagar district. MK Das, Additional Chief Secretary to the chief minister said at the virtual conference to mark ASSOCHAM foundation week on Friday, that this will be one of the world’s biggest zoos in terms of number and species of animals and spread over 250 acres in Jamnagar, according to PTI.

Around 9.55 AM, RIL shares were trading 1.3 per cent up at Rs 2,018 apiece on BSE, as compared to a 0.05 per cent rise in S&P BSE Sensex. In the previous week, RIL along with Hindustan Unilever Ltd witnessed erosion from the market valuation. While RIL remained at the top in the ranking of most valued firms last week. RIL share price hit a 52-week low of Rs 867.82 apiece on March 23 on the back of COVID-19 induced lockdown. The stock rose to Rs 2,368.80 apiece, an all-time high, in September this year. With today’s gain, RIL shares are up 133 per cent from March lows.

Earlier this month, during the India Mobile Congress event, Reliance Industries Ltd (RIL) chairman Mukesh Ambani pitched for policy interventions to shift 30 crore 2G users to 5G in India. Ambani also said that the Indian economy will soon bounce back and prove cynics wrong by becoming a $5 trillion economy. Ambani also announced that Reliance Jio will launch 5G services in the second half of 2021 in India, which will be powered by the indigenous network, hardware and technology components.

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