TCS to range between Rs 400-500

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TCS to range between Rs 400-500

TCS deserves to probably float around in a narrow 100-point range between Rs 400 and Rs 500. If the market goes to places then TCS can gravitate back upto Rs 550 kind of levels.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See what other CNBC-TV18 anchors have to say TCS BSE | NSE 25/05/12 Are Mutual Funds betting on TCS?

Here is a verbatim transcript of Udayan Mukherjee's comments on CNBC-TV18. Also watch the accompanying video.

If you look at TCS , given the kind of body language that you are seeing from the management and a difficult environment coming up next year too, one would be very surprised, if they mange to do anything significant in terms of profit growth in the next fiscal. We don't know how bad things can get on steady state from what we can see today you would predict no more than 10% kind of profit growth for TCS, it could get worse. But you work with that and then you go to get to somewhere between Rs 60 and Rs 65 earnings per share for next year- say Rs 62 or Rs 63 EPS for TCS you multiply that by 8 you get something close to Rs 500. You multiply that by 7 given this kind of weak environment and you get something like Rs 430 odd.

My own sense is that TCS probably deserves to be- unless that market takes off deserves to be in a steady straight range of between Rs 425 or Rs 400 to Rs 500. So, it is in that a narrower kind of a range than Infosys just about a 100 points kind of a range. If the market goes to places then TCS can gravitate back upto those kind of Rs 550 kind of levels beyond that I suspect it will be a bit of a stretch for that company to go on, and below Rs 400 significantly below that Rs 380-400 kind of levels- I think the cash, the management quality and the valuation might support it. So for my money I think TCS till there is far greater clarity in April quarter about the year, on the next couple of quarters depending on how the US shapes up, I think it deserves to probably float around in a narrow 100-point range between Rs 400 and Rs 500.

So, yes range bound to cut that story short but probably not as bigger range as Infosys. I think Infosys probably would still be the preferred accumulation candidate for the institutional guys, at least on the strength of what they have said in the current quarter.