TCS Declares Rs 27/Share 3rd Interm Dividend For FY24: Buy?

On Friday, Tata Consultancy Services (TCS) shares opened on the NSE at Rs 3,848 apiece and rallied to an intraday high of Rs 3,894, getting a 4.24% gain a day after the IT behemoth announced financial results for the quarter and nine-month period ended December 31, 2023, as well as a dividend of Rs 27 per share for FY24.

TCS Dividend

"We would like to inform you that at the Board Meeting held today, the Directors have declared a third interim dividend of Rs 9 and a special dividend of Rs 18 per Equity Share of Rs 1 each of the Company. The third interim dividend and the special dividend shall be paid on Monday, February 5, 2024, to the equity shareholders of the Company, whose names appear on the Register of Members of the Company or in the records of the Depositories as beneficial owners of the shares as on Friday, January 19, 2024, which is the Record Date fixed for the purpose," said TCS in a stock exchange filing.

Tata Consultancy Services has announced an equity dividend of 11500.00% at a face value of Rs 1 equal to Rs 115 per share for the financial year ended in March 2023. This comes in a dividend yield of 2.98% at the current share price of Rs 3886.00. The firm has a solid dividend track record and has distributed dividends consistently over the previous five years. According to Trendlyne, Tata Consultancy Services Ltd. has declared 83 dividends since October 28, 2004.

TCS Q3 Results

Tata Consultancy Services (TCS), India's largest IT services company, announced a net profit of Rs 11,058 crore for the quarter ended on December 31, 2023, up 2% from Rs 10,846 crore in the same quarter last year. TCS said in an exchange statement that consolidated revenue climbed 4 per cent year on year to Rs 60,583 crore in Q3FY24 from Rs 58,229 crore in Q3FY23.

The EBIT margin, or operating margin, climbed to 25%, while earnings per share increased to Rs 30.29 from Rs 29.64 in the same quarter of FY23. The operating margin of the IT firm rises by 50 basis points to 25.0%, while the net margin remains at 19.4%. TCS said its order book was $8.1 billion, Book to Bill ratio stood at 1.1 in the quarter under review.

TCS' workforce stood at 603,305 as of December 31st. "The employee base is very diverse, with 35.7% women and with 153 nationalities. Year till date, TCSers have clocked 39.7 million learning hours, and acquired 3.7 million competencies including 515,000 high demand competences. IT services' attrition was at 13.3% for the last twelve months," said TCS in a stock exchange filing.

K Krithivasan, Chief Executive Officer and Managing Director, said: "Our strong performance in a seasonally weak quarter buffeted by macro-economic headwinds, demonstrates the strength of our business model with a well-diversified portfolio and a customer centric strategy. We are seeing strong deal momentum across markets resulting in a solid order book providing visibility into our long-term growth. We are seeing tremendous interest in Generative AI and are leading the innovation and exploratory efforts for our customers in this area."

N Ganapathy Subramaniam, Chief Operating Officer and Executive Director, said: "The quarter saw us make significant progress in many projects of national importance, demonstrating our execution strength. Our products and platforms had a strong quarter with new wins and go-lives. The MCX platform is scaling well and processing record transaction volumes. We are on course with the BSNL 4G/5G network roll out. We are making good progress in upskilling our employees in Generative AI through our AI playground platform."

Samir Seksaria, Chief Financial Officer, said: "Our disciplined execution and operational rigor drove strong improvement in our industry leading margins despite seasonal headwinds. We are making the right investments in our people, innovation and infrastructure to differentiate ourselves and create long term value for all our stakeholders."

Milind Lakkad, Chief HR Officer, said: "The vibrancy and energy levels in our offices are increasing as more and more of our employees are back in the offices. We expect to be back to our normal operating mode by the end of the current fiscal year. Parallelly, attrition is trending down and at 13.3%, is now in our range of comfort. We are committed to hiring from college campuses and growing talent organically. We have commenced our campus hiring process for the next year and see tremendous excitement among freshers to join TCS."

TCS Q3 Results Outlook

"3QFY24 revenue of Tata Consultancy Services or TCS was up 1.7% yoy in constant currency or CC terms, with the beat driven by Bharat Sanchar Nigam (BSNL) deal ramp-up and aided by Europe/UK while North America geography, Financial Services (FSI), Technology & Services and Communication verticals were weak. However, the EBIT margin beat of 40/55bp relative to consensus/InCred estimates was encouraging, despite the shift in revenue mix.

Management commentary on a likely growth in the FSI vertical from 4QFY24F (led by deal ramp-up and portfolio stability), potential further improvement in the EBIT margin (driven by operational efficiency), timely conversion (read our 27 Nov 2023 report) & ramp-up of deals and a healthy pipeline, despite recent wins, is encouraging, but is likely priced in consensus current FY25F estimates," said Abhishek Shindadkr Research Analyst - IT Services, InCred Capital.

TCS Share Price Target

Deven Mehata-Equity Research Analyst at Choice Broking said, TCS, currently priced at Rs 3880, recently broke out above Rs 3770, signaling strength. The stock is trading above key Exponential Moving Averages (EMAs) - the 20-day, 50-day, and 200-day EMAs, reflecting strong bullish momentum and suggesting potential for further upward movement. The Relative Strength Index (RSI) at 65 indicates increasing buying momentum.

Collectively, these technical indicators suggest TCS may target Rs 4040 in the near term. To manage risk, a prudent approach is to set a stop-loss (SL) at Rs 3760, just below the support at 3770. Buying on dips around Rs 3820 and Rs 3810 could be a strategic entry.

Considering the technical analysis and current market conditions, TCS appears to be a promising buying opportunity, provided risk is managed cautiously with the outlined measures.

Disclaimer

The recommendations made above are by market analysts and are not advised by either the author, nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.