Tata Consultancy and Tata Teleservices analysis: better buy?

One is thriving, and the other one is in not doing too well. Tata Consultancy Services (TCS) share price is doing well as it sits at its all-time high. It has jumped in the last three consecutive months, moving to its all-time high of ₹4,556. Also, it is up by over 22% this year, outperforming the Nifty 50 and BSE Sensex, which have risen by about 15.5%.

Tata Teleservices (TTML), on the other hand, has risen by less than 12% this year and remains 65% below its highest level in 2022. This makes it one of the worst-performing companies in India. 

Tata Consultancy Services is doing well

Tata Consultancy is one of the biggest IT consulting companies in the world. It is a leading company that helps companies and organizations achieve more IT success without the need for hiring thousands of workers. 

For example, a banking group that wants to integrate digital solutions can hire TCS to do the hard work. The same is true for companies that want to integrate cloud computing and artificial intelligence solutions. Some of its solutions are AI, cloud, cybersecurity, data and analytics, and consulting.

The company operates in a fairly competitive industry, with some of the top firms in the sector being Infosys, Wipro, Cognizant, and Accenture. 

Therefore, the company’s business is doing well as IT spending continues rising globally. A recent report by Gartner estimated that worldwide IT spending will jump by 7.5% this year to $5.26 trillion. Most of this spending will happen as companies boost their investments in generative AI.

TCS’s financial results showed that its revenue rose by 5.4% in the last quarter to ₹626,130 million or $7.5 billion. Its operating and net profit margins rose to 24.7% and 19.2%, respectively. 

Most of its revenue growth was in North America, where the company helps hundreds of large companies. Banking and finance, consumer, and life sciences are its biggest verticals. 

Therefore, the company will likely continue benefiting as interest rates start falling, leading to more investments in IT. 

The weekly chart shows that the Tata Consultancy Services share price has done well after bottoming at ₹1,380 in 2020. Most recently, the stock jumped above the key resistance point at ₹4,217, its highest swing in March this year and invalidating the double-top pattern that was forming.

TCS stock has remained above all moving averages, meaning that bulls are still in control. As such, it may continue rising as buyers target the next point at ₹4,600. 

Tata Teleservices is not doing well

Meanwhile, Tata Teleservices (TTML), which counts Tata Group as a big shareholder, is not doing well. 

For starters, TTML is a telecom company that provides numerous services like business communications, network and connectivity, collaboration, and cloud infrastructure. Its goal is to provide unified solutions for companies in India.

While the Tata Teleservices share price has doubled from its lowest point in 2023, it remains sharply lower than its all-time high. 

This performance is mostly because Tata Tele continues to make substantial losses. Its most recent results showed that the company’s revenue rose by 7.8% to ₹12 billion while its EBITDA rose to ₹536 million.

However, because of high costs, the company’s profit after tax continued falling, moving from ₹1.145 billion in FY23 to over ₹1.22 billion. This loss was mostly because of financing charges of about ₹1.6 billion.

The most recent quarterly results showed that the company’s standalone net loss stood at ₹354 crore in the June quarter. The management has committed to continue improving its operations and narrowing its losses.

Tata Teleservices stock analysis

Turning to the daily chart, we see that the Tata Teleservices share price has bounced back after bottoming at ₹65.15 in June. Most of the recent gains happened after the company published its financial results in July.

The post-earnings jump pushed it to a high of ₹111.17, its highest level in October 2022. It then pulled back and retested the important support level at ₹87.22. Now, the stock has rebounded and moved above the important resistance level at ₹100, its highest swing on January 9.

Tata Teleservices shares have remained above the 50-day and 100-day moving averages, which is a bullish sign. 

Therefore, the stock will likely continue rising as bulls target the key resistance point at ₹111.17, its highest point in July. A move above that level will lead to more upside as traders target the key resistance point at ₹120.

TCS vs TTML: better buy?

One may argue that TTML is a good buy now that TCS stock has surged to a record high and has become relatively overvalued. TTML, on the other hand, still has more room to retest its all-time high. 

However, I believe that Tata Consultancy is a better company because of its market share in the tech industry and its strong dividends. Tata Teleservices is a riskier company that has continued to report big losses.