TCS turns volatile post Q4 results

The stock was up 1.7% to Rs 2,348 bouncing back 4% from its intra-day low of Rs 2,255 on BSE.

Tata Consultancy Services (TCS) was up 1.7% to Rs 2,348 at 09:34 am; bouncing back 4% from its two-months low touched in early morning trade on BSE post March quarter results (Q4FY17).

The stock of information technology (IT) dipped 2.4% to Rs 2,255 in intra-day trade after the company reported 1% quarter on quarter (QoQ) growth in its constant currency revenues — lower than analysts’ expectations of 1.5 to 2%.

TCS, India’s largest software exporter, said on Tuesday both fourth quarter (Q4) profits and revenues grew 4.2% to Rs 6,608 crore and Rs 29,642 crore, on the back of improved digital business, but currency volatility impacted its margins in the three-month period. CLICK HERE TO READ FULL REPORT.

“BFSI, Retail and Hitech were the key drags in FY17, of which TCS expects to see a recovery in BFSI and Hi-Tech next year. The stronger verticals will likely see continued traction, although the outlook is more of cautious optimism in Communications and Manufacturing,” analysts as Motilal Oswal Securities said in results update.

The brokerage firm maintains ‘neutral’ rating on the stock with target price of Rs 2,400 per share.

A relative weaker exit to the fiscal and currency headwinds to margins drive 1%/3% cut in our USD revenue/earnings estimates. At 16.5x FY18E earnings, TCS continues to command a significant premium, which could come under pressure given a year of weak earnings growth (4.7% YoY in FY18E), added report.

At 10:04 am; the stock was trading 0.50% higher at Rs 2,320 after opening at Rs 2,285 on BSE. On comparison, the S&P BSE Sensex was down marginally by 0.07% at Rs 29,300.