1. Day after N Chandrasekaran shifted to Tata Sons, TCS stock tumbles 4%, hits 1-mth low

Day after N Chandrasekaran shifted to Tata Sons, TCS stock tumbles 4%, hits 1-mth low

The stock price of Tata Consultancy Services (TCS) fell by almost 4% intra day on Friday to hit one-month low after the software giant on Thursday announced results for the third quarter.

By: | Mumbai | Published: January 14, 2017 6:04 AM
tcs Analysts believe the changes in TCS’s top management could be a sentimental setback for investors, and this may keep the stock under pressure for some time.

The stock price of Tata Consultancy Services (TCS) fell by almost 4% intra day on Friday to hit one-month low after the software giant on Thursday announced results for the third quarter. The blue-chip stock fell 3.90% to end at R2,252 on the BSE. During the day, it declined 4.34% to R2,241.50. On the NSE, the scrip declined 4% to close at R2,249.30.

Analysts believe the changes in TCS’s top management could be a sentimental setback for investors, and this may keep the stock under pressure for some time. “The stock could be under pressure on the back of these management changes, especially given the strong credentials of the outgoing CEO,” a Jefferies report observed.

CEO and MD of TCS N Chandrasekaran was on Thursday appointed executive chairman of Tata Sons, the holding company for the $100-billion Tata conglomerate. The board of TCS on Thursday appointed current chief financial officer Rajesh Gopinathan as the new chief executive officer and managing director in place of Chandrasekaran.

TCS was the second-biggest loser on the BSE Information Technology index on Friday. The counter, however, saw a spurt in volumes, which increased by nearly six
times to 4.57 lakh over the previous two weeks’ average of 0.77 lakh.

At the post-results press conference on Thursday, TCS flagged issues surrounding H1-B visas in the US as a key challenge going forward. The company’s MD and CEO, however, observed that the company was well prepared to meet challenges following regulatory changes relating to US visas.

“The company showed a very constructive stance towards potential immigration reforms having already started calibrating business model towards lower visas (applied 4K visas last year vs 14K), adjusting onsite cost structure and local hiring,” a Jefferies report observed.

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TCS had reported in-line results for the December quarter on Thursday, with net profits coming in at Rs 6,778 crore, up 2.9% sequentially. The software giant reported EBIT margin of 26% within its guided range of 26-28%.

The management observed that it had become difficult to cope with foreign exchange fluctuations.

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