Profit up 15%, but TCV $9.6bn misses my $10bn test

TCS reported Q2 FY27 consolidated net profit of Rs 13,884 crore, up about 15 percent YoY, on revenue of Rs 73,188 crore, up 11.2 percent. Revenue grew 0.5 percent QoQ in constant currency. The board declared an interim dividend of Rs 12 a share, with a record date of 14 October. Q2 FY27 numbers (consolidated, board meeting 8 October): Net profit: Rs 13,884 crore, up about 15 percent from Rs 12,075 crore Revenue: Rs 73,188 crore, up 11.2 percent YoY; constant currency up 0.5 percent QoQ Operating margin: 24.0 percent Total contract value: $9.6 billion My 1 October post set three conditions for accumulation: constant-currency growth of at least 0.5 percent, margin near 24 percent, and TCV above $10 billion. Two are met. TCV at $9.6 billion is short of the $10 billion test. The reported EBITDA margin fell 162 basis points YoY to 25.7 percent. TCS [][***** trades at Rs 2,326.27 at 11:14 AM IST today on StockGro, up 2.9 percent. The 52-week low is Rs 1,976.80, the 1 July level from my 1 October post. At 16.1 to 16.3 times trailing earnings, against a sector P/E of 19.5, the stock is no longer cheap against its sector. My view: hold for holders, not a fresh entry. The Rs 1,976.80 to 2,050 zone needed all three conditions, and two are met, so the zone stays unused. The stock is 13.5 percent above the zone top, so the zone is no longer the entry. I need TCV of $10 billion or more in the next quarter, and a pullback into the zone with the conditions intact. Without both, no fresh money. My exit is a close below Rs 1,976.80, the 1 July low. Disclosure: Vijay Kumar Gupta, SEBI Registered Research Analyst, INH000020226, Vijay Gupta Advisory. SEBI registration and NISM certification do not guarantee performance or assure returns. Securities markets are subject to market risks. No holdings in the subject company.