Should You Buy TCS Stock Today? Key Insights from Q2 Results 2024

Tata Consultancy Services (TCS) shares are on the watchlist for Indian stock market investors following the release of its Q2 results for 2024. The IT giant reported a modest 5% year-on-year increase in net profit for the July-September quarter, continuing a trend of cautious performance. Revenue rose about 8%, but the operating margin fell slightly compared to last year.

Market experts noted that despite missing revenue and margin expectations, TCS’s employee count grew, which is a positive sign. They believe that the easing of US Federal Reserve monetary policy will help Indian IT companies, including TCS. They recommend buying TCS shares, forecasting a short-term target price of ₹4,500 each.

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TCS Q2 Results Overview

Sanjeev Hota, Head of Research at Sharekhan by BNP Paribas, reviewed TCS’s Q2 results, calling them weak due to misses in both revenue and margins. TCS’s total contract value (TCV) wins were $8.6 billion, which fell below expectations and was lower than the eight-quarter average of about $9.6 billion. However, there was a 0.9% quarter-on-quarter increase in employee count and a 1.9% rise in the BFSI sector’s revenue in USD terms.

TCS’s net profit declined by 1.1% quarter-on-quarter to ₹11,909 crore, which was below market expectations. However, revenue in rupees rose 2.6% quarter-on-quarter to ₹64,259 crore. The EBIT margin decreased to 24.1% from 24.7% in the previous quarter. The company announced a second interim dividend of ₹10 per share, with a record date of October 18, 2024. TCS also canceled its post-earnings press conference and interviews following the passing of Ratan Tata.

TCS Share Price Target

Sumeet Bagadia, Executive Director at Choice Broking, advised TCS shareholders to hold onto their stocks with a stop-loss at ₹4,100. If this level holds, he suggests buying more shares for a near-term target of ₹4,400 to ₹4,500. New investors are also encouraged to buy TCS shares, using a buy-on-dips strategy for the same price targets while maintaining a stop-loss at ₹4,100.

Overall, TCS reported a 5% year-on-year increase in net profit for the July-September quarter, while revenue rose by about 8%. However, its operating margin showed a slight decline. Growth was driven by areas like cybersecurity, AI, cloud services, and TCS Interactive in the September quarter.