How are energy investors positioned?
Investing.com - JPMorgan has upgraded Tata Consultancy Services Ltd. (NSE:TCS) from Neutral to Overweight and raised its price target to INR3,800.00 from INR3,650.00.
The upgrade comes as TCS has underperformed the NIFTY by 29% year-to-date and NSEIT by 6% following successive earnings cuts due to lower-than-expected growth and margin challenges.
JPMorgan notes that staff redundancies of 2%, combined with strong cost control measures and foreign exchange tailwinds, are likely to stabilize margins after several quarters of erosion.
The investment bank has moderated its International constant currency year-over-year growth projections to 0%/5% for FY26/27 but increased margin forecasts by 55/57 basis points for the same periods, resulting in a 2-3% upgrade to FY26-28 earnings per share estimates.
TCS currently trades at 19.7x two-year forward price-to-earnings ratio, two standard deviations below its five-year average, with one-year forward free cash flow and dividend yields at 4.5% and 3.8% respectively, their lowest in a decade outside the COVID period.
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