TCS dips post June quarter results

The stock was down by nearly 2% at Rs 2,482, declining 3% from its intra-day high on the National Stock Exchange.

Shares of Tata Consultancy Services (TCS) were trading lower by nearly 2% at Rs 2,482, declining 3% from their intra-day highs on the National Stock Exchange (NSE) after reporting a mixed set of numbers in April-June quarter (Q1FY16).

The stock, which had opened 1.4% higher at Rs 2,559, has fallen 3.3% and touched a low of Rs 2,473 on the NSE. Till 1045 hours, a combined around two million shares changed hands on the counter on the NSE and BSE.

TCS beat consensus estimates on net profit and margin for the quarter ended June, but revenue growth in dollar terms was below the Street’s estimates.

The company reported a net profit of Rs 5,709 crore, down 3.3% on a sequential basis. The operational revenues grew 6% at Rs 25,668 crore sequentially. In dollar terms, revenues grew 3.5% on a quarter-on-quarter basis.

Analysts on an average had expected a profit of Rs 5,470 crore on revenues of Rs 25,891 crore.

Meanwhile, Reliance Securities has maintained a ‘Buy’ rating on the stock, with a target price of Rs 3,030.

“We believe that strong digital adoption (digital revenue at 12.5% of 1Q revenue and growth at double-digit on sequential basis) and large transformational infrastructure deals (improvement in client metrics and infrastructure services) will drive growth ahead mitigating headwinds in energy/insurance/telecom”, Reliance Securities in a results update.

"A resilient operating margin performance and marginally higher Re/US$ assumptions has led to 4-5% upgrade in our earnings estimates for FY17. Given TCS’ track record of unhindered industry beating growth, the stock has been trading at a relative premium valuation to peers who have faced intermittent phases of revenue growth challenges in the recent years. Upgrade rating from Reduce to Accumulate and raise 12-month target to Rs 2,700," the broking firm IIFL said in a client note.