Shares of TCS were wobbly on Friday morning after the company’s September quarter earnings missed street estimates.

What Happened: TCS saw its net profit grow 5% year on year to ₹11,909 crore from ₹11,342 crore in the previous year. The Tata Group company reported a revenue of ₹64,259 crore which was 7.5% up from the previous year's revenue.

The IT major also declared an interim dividend of ₹10. The record date is on October 18 and the dividend will be paid on November 5.

Brokerage Views: Motilal Oswal maintained a "buy" call on the stock with a target price of ₹5,400. The brokerage said the BSNL ramp-up continues to fuel growth. Despite the unexpected decline in North American business, The US Banking, Financial Services and Insurance (BFSI) recovery is on track, Motilal Oswal added. 

With wage hikes behind the company, best-in-class pyramid, the research firm expects margin to improve sequentially. Motilal Oswal sees the BSNL deal and another large ramp-up to support revenue growth in FY25.

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JPMorgan has maintained an “overweight” rating on TCS but has cut the target price to ₹5,100 from ₹5,200. The report highlights that TCS’s revenues fell by 0.4% in constant currency (CC) quarter-on-quarter, marking the company’s weakest performance since the onset of the Covid-19 pandemic. The brokerage attributes all growth in this quarter to the heavily margin-dilutive BSNL contract.

JPMorgan expects growth to recover in the second half of FY25, particularly from the Financial Services (FS) and Tech sectors. Additionally, they foresee the unwinding of the BSNL contract to help TCS’s margins revert to traditional levels.

HDFC Securities maintained its “add” rating for the stock with a price target of ₹4,650. The analysts highlighted that TCS delivered a mixed performance, with growth being driven primarily by the BSNL deal. Despite this, the overall outlook for TCS remains positive.

Nomura kept a "neutral" call for TCS with a target price of ₹4,150. The Q2 revenue saw a modest miss in revenue, but a significant miss at margins, the research firm observed. The brokerage firm said the company's order pipeline is near record high levels and while the total contract value has declined it is within a comfortable band. Nomura cut the FY25-26 earnings per share (EPS) estimates by 1.6%-2.4%.

Citi, on the other hand, maintained a "sell" call and cut the target price to ₹3,935. The brokerage said with weak Q2, EPS downgrades are likely for the stock. Management commentary indicates that the demand environment is still cautious. The research firm expects a modest and gradual recovery in IT services. 

Price Action: Shares of TCS were down 0.84% to ₹4,192.10 on Friday morning.

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