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TCS Share Price Forecast: Is Tata Consultancy a Good Buy Today?

April 27, 2021, Brazil. In this photo illustration the Tata Consultancy Services Limited (TCS) logo seen displayed on a smartphone screen

The TCS share price has been under pressure in 2022 as investors waited for the upcoming Q2 earnings. Tata Consultancy Services stock was trading at 3,078 INR, meaning it has crashed by almost 20% in 2022. It has crashed by 23% from its highest point in 2021 as worries about technology spending in the US and other countries.

TCS earnings in focus

Tata Consultancy Services is a leading company in the IT industry. It is the second-biggest Indian company by market cap since it is valued at over $136 billion. The only bigger company is Reliance Industry, which is valued at over $196 billion. The combination of all companies of Adani Group is also bigger.

Tata Consultancy is mostly owned by Tata Sons, who hold about 70% of the company. They also own other firms like Tata Teleservices and Tata Motors. Other big holders are Life Insurance Corporation of India, SBI Mutual Fund, and Axis Mutual Fund.

The TCS share price was in the spotlight on Monday as investors focused on the company’s earnings. Analysts expect the company will post a 7.2% increase in net profit even as business remained under pressure. If this happens, the company’s profit will be more than $1.26 billion. 

At the same time, analysts expect that the company’s revenue rose by between 3% and 4.6% on constant currency terms. Analysts at Jefferies believe that its revenue growth will be 17.20% while those at Kotak Institution Equities believe it rose by 17.30%.

The key mover for the TCS stock price will be the management’s commentary on the overall spending for IT as companies turn cautious. 

TCS share price forecast

In my last Tata Consultancy shares review, I warned that the overall trend was bearish. The daily chart shows that the Tata Consultancy Services share price has been in a strong bearish trend in the past few months. Along the way, the stock dropped below the important support level at 3,384 INR, which was the lowest level on February 25th. The stock crashed below the 25-day and 50-day moving averages and the descending trendline shown in purple. At the same time, the MACD has moved below the neutral level. 

Therefore, the stock will likely have a bearish breakdown in the coming weeks. This drop will be confirmed if it manages to move below the important support level at 2,800 INR. A move above the resistance at 3,100 INR will. Invalidate the bearish view. 

TCS Share price