What options strategy should investors look for in TCS ahead of Q4?
IT giant TCS witnessed selling pressure on Tuesday ahead of its Q4 earnings. On BSE, TCS shares dipped by over 2%. Not just that, the majority of IT stocks were in the red ahead of the company’s results. In the equity derivatives segment, Axis Securities gives a result strategy in TCS to traders.
In its options strategy report, Axis Securities said, “TCS closed on a Negative note with the loss of around 8% in March Expiry with rollover of 92% v/s 3month average of 95%, indicating that the slightly positions have trimmed.”
On Tuesday, in equity derivatives, the TCS option price stood at ₹3,205 on NSE.
The brokerage added that in April expiry, the stock is currently up by 3.5% while there was a marginal decrement in open interest to the tune of 1%, indicating Short Covering witness in the Stock.
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Interestingly, Axis Securities revealed that in general, “during the announcement of result session we have observed that Infosys moves in the range of 3-5% either on the upside or on the downside and hence we are advising the below mention strategy.”
Hence, Axis Securities recommends “Buy” in TCS at a strike price of 3340 (CALL) in the range of 17 – 19, while Sell at a strike price of 3200 (CALL) in the range of 70-72.
Also, the brokerage gave a “Sell” recommendation on TCS for a strike price of 3200 (Put), and “Buy” for a strike price of 3060.
The brokerage expects max reward to be around ₹17,159 and max risk to be around ₹-7,359.
₹10,846 crore attributable to shareholders on a consolidated basis up by 11.02% YoY and 3.98% QoQ.” title=”During December 2022 quarter, TCS garnered a net profit of ₹10,846 crore attributable to shareholders on a consolidated basis up by 11.02% YoY and 3.98% QoQ.”>
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Overall, the profit range is seen at the upper case of 3280 and lower case of 3120 on TCS.
“Kindly enter & exit all the legs in strategy together and square off the strategy before the session closes,” Axis Securities note said.
Meanwhile, on stock exchanges, on BSE, TCS shares closed at ₹3,214.25 apiece down by 1.50%. The stock had dipped by over 2% with an intraday low of ₹3275 apiece. TCS is the second most valued company and the largest IT firm in terms of market share. As of April 11, the company’s m-cap is over ₹11.76 lakh crore.
During December 2022 quarter, TCS garnered a net profit of ₹10,846 crore attributable to shareholders on a consolidated basis up by 11.02% YoY and 3.98% QoQ. The net margin stood at 18.6% for the quarter, whereas the operating margin stood at 24.5% contracting by 0.5% YoY.
On the other hand, TCS consolidated revenue from operations came in at ₹58,229 crore increasing by 19.11% YoY and 5.28% QoQ. In terms of constant currency, the revenue growth was at 13.5% YoY driven by business in North America and the UK. TCS’ order book stood at $7.8 billion as of December 31, 2022, versus $8.1 billion in 2QFY23.
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