Shares of IT companies were in the spotlight today after TCS said it would consider buying back shares later this week. TCS shares rose more than 5.5% to a new high of ₹2,666 while Infosys shares rose 4% to ₹1,054, also a new record.
TCS’s board will meet on October 7 to consider a proposal to buy back shares in the company. No other details of the buyback plan were disclosed. The board of directors is also scheduled to consider its financial results for the September quarter and the declaration of a second interim dividend to equity shareholders at that meeting.
In 2018, the Mumbai-based company had embarked on a share buyback program worth up to ₹16,000 crore. The repurchase, in ₹2,100 per share of capital, had involved up to 7.61 million shares.
Many analysts remain positive about TI stocks. “The second quarter of fiscal 21 will usher in strong 3-6% quarterly revenue growth (in USD) for large caps, aided by cross currency tailwinds of 135-185 basis points. estimates that TCS, Infosys, HCL Tech, Wipro and Tech Mahindra will report 5.0%, 5.4%, 6.3%, 3.0% and 3.7% growth, respectively QoQ; we estimate an EBIT margin expansion of 200bp, 20bp, 80bp, 40bp and 250bp , respectively, quarterly, “national broker Edelweiss said in a note.
“We expect strong feedback, record deal gains, and guidance updates from all companies. Revenue growth will be led by strong momentum across all industries, verticals and geographies. We believe this is the beginning of updates from guidance from companies and will be followed by consensus updates for several quarters to come, “he said.
Edelweiss likes Infosys, HCL Tech, TCS, Tech Mahindra, Mindtree, LTI, LTTS, Eclerx, Persistent, and Cyient in this space.
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Last month, leading IT services company HCL Tech said it expects second-quarter revenue and operating margin to be “significantly better” than the previous forecast.
The Noida-based company expects its revenue growth in constant currency terms to exceed 3.5% quarter-on-quarter (quarter-on-quarter) for the July-September 2020 period. In July, the company had forecast its revenue to increase quarter-on-quarter by an average of 1.5-2.5% in constant currency over the next three quarters.
“We have seen strong execution during the quarter to date and we continue to execute the plan this month,” said HCL Technologies.
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