TCS share price slumps after Q1 results; should you buy or sell stock?

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Published: July 10, 2019 12:47:57 PM

Shares of India's largest IT giant TCS slumped in trade on Wednesday morning, after the firm's revenue growth came in lower than consensus expectations.

TCS Q1, TCS Result, TCS Profit, TCS Revenue, BFSI, digital growth, Rupee Strong, टाटा कसंल्टेंसी, तिमाही नतीजे, earning season, TCS IT CompanyTCS share price slumped more than 3% to hit the day’s low at Rs 2,070.10 on BSE this morning.

Shares of India’s largest IT giant TCS slumped in trade on Wednesday morning, after the firm’s revenue growth came in lower than consensus expectations. TCS share price slumped more than 3% to hit the day’s low at Rs 2,070.10 on BSE this morning. The firm had reported a 10.80% jump in net profit to Rs 8,131 crore. The IT giant’s revenue stood at Rs 38,172 crore implying a 11.4% jump on-year. In constant currency terms the revenue growth increased  10.6% on-year. Taking stock of the reported earnings, global firm Jefferies has maintained a buy call on the stock with a target ptice of Rs 2,380.

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Jefferies noted that BFSI and retail were the key misses for the quarter. Further the EBIT margin was also 30 bps below its estimates. The operating margin stood at 24.2% in the latest quarter. Jefferies has a buy rating on the stock with a target stock price of Rs 2,380. The global brokerage firm noted that the deal pipeline remians strong keeping the firm optimistic about double digit revenue growth in FY20. Rajesh Gopinathan, CEO and MD at TCS said, “We have had a steady start to the new fiscal year. We see customers contInuing to spend on their growth and transformation initiatives, and that is showing in our strong order book and deal pipeline this quarter.”

Credit Suisse has cut the target stock price to Rs 2,000 from Rs 2,130 earlier. TCS is likely to miss 26-28% margin band once again this year. The firm said that it moderates FY20-21 growth estimate over 150 bps each and cut EPS estimate by 2-4%. Global research firm Morgan Stanley said that Q1 revenue growth came in lower than expected. Further, the next quarter will be critical in achieving the management’s gloal of achieving double digit constant currency growth in FY20. The global firm sees downside risks to street estimates. Morgan Stanley has a target price of Rs 1,980 on the shares.

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