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TCS hits 3 month low after IT major posts record Q2 profit amid margin worries

TCS hits 3-month low after IT major posts record Q2 profit amid margin worries

TCS hits 3-month low after IT major posts record Q2 profit amid margin worries
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By CNBC-TV18 Oct 12, 2018 3:08:54 PM IST (Updated)

Shares of Tata Consultancy Services (TCS) declined as much as 3.79 percent to Rs 1,904.80, their lowest level since July 11.

Shares of Tata Consultancy Services (TCS) declined as much as 3.79 percent to Rs 1,904.80, their lowest level since July 11.

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India’s largest software exporter reported a 22.6 percent jump in consolidated net profit at Rs 7,901 crore in the July-September 2018 quarter on Thursday beating estimates, helped by revenues from retail sector and banking, financial services and insurance clients.
Speaking with CNBC-TV18, Rajesh Gopinathan, chief executive officer and managing director of the company said he is confident of maintaining double-digit growth in FY19.
Gopinathan said TCS should be in a good position and will be entering FY20 in a much better way than last couple of years.
"If you look at multiple markets perspective from geographical market perspective, structurally they are setup well,” he added.
Brokerage firm Jefferies has cut price target to Rs 2,300 from Rs 2,315 citing EBIT (earnings before interest and taxes) margin of 26.5 percent, missing their expectation on lower operational efficiency gains.
Nomura expects marginal downside to consensus growth numbers and possible tempering of multiples, given the shift in liquidity scenario. The brokerage firm maintains “reduce” rating with a price target of Rs 1,950.
Macquarie, however, expects the company to post strongest organic growth of tier-1 pack. It believes TCS’ premium valuations can be sustained on the back of this. Macquarie maintains “outperform” rating with price target of Rs 2,345.
More than 1.9 million shares changed hands in first half an hour of trading, compared with 30-day average of 2.7 million shares. 22 of 45 brokerages covering the stock rate it “buy” or higher, 16 “hold” and seven “sell” or lower; their median price target is Rs 2,060.
TCS shares traded at Rs 1924.45, down by 2.79 percent at 1.16 PM on the BSE. Meanwhile, benchmark indexes sustained gains with the Sensex surging by 735 points or 2.16 percent, to trade at 34,737. The Nifty too jumped 227 points, or 2.22 percent, to 10,462.
(With inputs from Reuters)
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