TCS’ second quarter revenues and margin missed Street expectations.
Margins, JPMorgan said, were 20 basis points below Street expectations, even as deal wins were healthy at $7.6 billion. “Misses on revenue and margin are likely to weigh on the stock” it said.
CLSA said seasonal acceleration was missing and a modest order book could weigh on premium valuations.
At 9.23 am, the TCS stock was down 6.04 per cent at Rs 3,697.60. At this price, the IT firm commanded a m-cap of Rs 13,68,279.10 crore, down by Rs 87,409 crore over Friday’s Rs 14,55,687.69 crore.
The second largest IT firm,
, lost Rs 20,148.87 crore in m-cap to Rs 7,10,958.25 crore. This stock was down 2.81 per cent at Rs 1,675.20 at 9:23 hours (IST).
At Rs 641.95, was down 2.93 per cent. This stock eroded Rs 10,715 crore in m-cap. HCL Tech lost Rs 9,823.46 crore in m-cap while Tech Mahindra eroded Rs 4,179.47 crore. The stocks were down 3 per cent each.
Kotak Institutional Equities said it has accounted for a muted performance through a 3-4 per cent cut in EPS. A large part of the change is margin-led, it said while suggesting that the demand environment is reasonably strong led by spending by clients on core modernisation and accelerated spending on digitalisation, cloud adoption and business transformation, leading to a plethora of digital deals of all sizes.
“The runway for growth is reasonably long with potential for double-digit growth till FY2024E. TCS has better supply-side management that its peers, which will allow it to grow profitably. It trades at multiples that are higher than historical levels but justified by higher growth,” Kotak said.
