Shares of TCS dipped early on Wednesday as the company posted its earnings for the quarter ended September.

What Happened: The Tata Group company on Wednesday evening reported a 9% year-on-year (YoY) increase in its consolidated net profit for the September quarter, reaching ₹11,342 crore. The company also experienced nearly an 8% year-on-year growth in consolidated revenue, totalling ₹59,692 crore. The profits were slightly higher than estimates, while the revenue missed expectations by a small margin.

When looking at the quarter-on-quarter performance, the growth was more subdued, with revenue increasing by a modest 0.5%, and profit showing a 2.4% uptick. TCS also saw a sequential improvement in its operating margin, with EBIT margin going up 110 basis points, reaching 24.3%

The IT behemoth has proposed a second interim dividend of ₹9 per share. Additionally, the board has given its approval for a share buyback program, amounting to ₹17,000 crore at ₹4,150 per share – a 14% premium over Wednesday’s close of ₹3,609.90.

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Brokerage Reactions: Brokerages mostly remained unimpressed with the company’s results. HSBC maintained its “hold” rating on the stock with a target price of ₹3,625. The firm said that while the company’s order wins were strong, the company missed estimates on revenue and is unlikely to see any recovery in the second half of FY24 as well.

Nomura also maintained its “reduce” rating on the stock cutting the price target to ₹3,030 from ₹3,040. The firm said that the company’s sluggish growth continued in the September quarter. CIti also maintained its “sell” rating on the stock with a price target of ₹3,172. The global brokerage said that the company’s growth in the last three quarters on a sequential basis has been flat.

Morgan Stanley also reiterated its “equalweight” stance on the stock cutting the target price to ₹3,590 from ₹3,730. On the other hand, Goldman Sachs remained positive on the stock, maintaining its “buy” rating with a price target of ₹4,020. The research firm said that the order book reflects an improving revenue growth trajectory from the second half of FY22.

Price Action: TCS’ share price was down 1.12% to trade at ₹3,569.55 as the markets opened on Thursday.

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