TCS shares their 6-month low on Thursday after it announced that there could be a sequential loss as its clients may hold back discretionary spending in BFSI space in the US.
Tata Consultancy Services (TCS) shares their 6-month low on Thursday after the company announced that there could be a sequential loss as its clients may hold back discretionary spending in banking financial services and insurance space in the United States. The share price of the company closed 5.14 per cent down at Rs 2321.15. The scrip opened the day at Rs 2367 and touched a high and low of Rs 2367 and Rs 2287, respectively, in trade. The BSE IT index closed 2.49 per cent down at 10,164.96
In a BSE filing, TCS said, “The company intends to update investors on business trends in the second quarter of 2016-17. Based on data at the end of August 2016, the company has characterised customer outlook as one marked by abundant caution, with some holding back of discretionary spending- particularly in the BFSI vertical in the United States – resulting in a sequential loss of momentum.”
Analysts at IDFC Securities believes that slower revenue growth momentum and cross currency impact could sap momentum after soft Q1. The brokerage house estimates 2 per cent fall in revenue growth in dollar terms and flat margins in Q2. However, IDFC maintained ‘outperformer’ rating for TCS shares but lowers the target price to Rs 2,670 from Rs 2,770 earlier.
For the quarter ended June 30, 2016, TCS reported a consolidated net profit of Rs 6317 crore, down 1.50 per cent, against Rs 6413.12 crore in the sequential quarter ended March 31, 2016. However, net sales of the company jumped by 3.01 per cent quarter -on-quarter to Rs 29305 crore for the quarter ended June 30, 2016.