Breaking news

Meghalaya Governor Satya Pal Malik’s stand has not softened even after moreAll You Need to Know About Cryptocurrency in India: Trends, Legality and more The Champaran Foundation, in collaboration with InFeed, organised an online more In one of the biggest leaks ever of offshore financial records, the more The Champaran Foundation, in collaboration with InFeed, is inviting entries more The recently concluded German elections on September 26, 2021 have given a more According to latest news reports, China has been on a defense infrastructure more A new line of argument has already come to dominate the public sphere: it’ more The government has gone one step further to detect community spread of the more The government has issued an order to abolish the six allowances, including more Aarogya Setu application launched by NIC is aimed to track COVID-19 affected more SEOUL| South Korea’s unemployment rate was unchanged in April as the more Amid the outbreak of Corona pandemic in the country, Indian government has more Prime Minister Narendra Modi in his address to the nation on Tuesday indicated more Corona infection in the country is taking a macabre form. So far, more than 74 more Congress General Secretary Priyanka Gandhi Vadra has written a letter to UP more On Tuesday, Prime Minister Narendra Modi announced a package of Rs 20 lakh more

After Q2 earnings TCS shares fall sharply

The second-quarter earnings of TCS missed analyst expectations on many fronts, pushing its shares down 3% at 1,944 in early trade today. TCS, which announced Q2 results post market hours on Thursday, reported a net profit of 8,042 crore in the three months ended September 30, missing the average analyst estimate of 8,255 crore. battled sluggish spending by financial clients. Operating margins dropped to 24% from 26.5% from a year ago.

TCS said its revenue in its key banking, financial services and insurance (BFSI) segment rose only 5.3% to 15,427 crore. TCS heavily relies on banking clients in the West for revenue like its peers in the $180-billion IT services sector.

After four quarters of double digit growth, TCS reported a growth of 8.4% in constant currency. Q2 is typically a seasonally strong quarter for Indian IT companies.

“We downgrade our operational earnings estimate by 2-4%. Growth performance this quarter only dampens the FY20 growth prospects further. EBIT margin contraction of 250bp YoY is a reflection of high pressure on earnings growth,” Motilal Oswal said in a note. The brokerage has maintained its neutral rating on TCS stock, with a target price of 2,000.

“However, margins are likely to recover to an extent because of normalization of utilization. Demand outlook for the medium term remains healthy considering strong deal wins. We expect USD revenue/EPS CAGR of 7%/7.5% over FY19-21,” the brokerage added.

TCS CEO Rajesh Gopinathan in a statement said that the company’s Q2 order book was the highest in the last six quarters. TCS announced a dividend of 45 per share, including special dividend of 40 per share.

This is the second successive quarter when the IT major has missed estimates on both revenue and margin.

Harit Shah, research analyst at Reliance Securities, in a note said that “this is the second successive quarter when the IT major has missed estimates on both revenue and margin.”

“While TCS continues to see healthy orders, conversion to revenue is taking time, partly owing to participation in clients’ digital journeys and rising deal sizes, leading to involvement of more executives in decision making. With the near-term outlook sticky and growth hard to come by, there is a case for a multiple derating, given rich valuations of 21.5x/19.7x FY21E/FY22E EPS,” he added.

Tags: , , , ,

Story Page