The Tata Consultancy Services (TCS) share price declined over 6 percent in early trade on October 11 after the company reported its September quarter numbers.
On October 8, TCS had reported a consolidated net profit of Rs 9,624 crore for the second quarter of 2021-22, registering a 14.1 percent on-year growth.
Its consolidated revenue during the July-September period stood at Rs 46,867 crore, up 16.8 percent over a year-ago quarter. The revenue growth in constant currency came in at 15.5 percent YoY.
On a sequential basis, profit grew 6.8 percent and the revenue increased by 3.2 percent in Q2FY22.
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Here is what foreign brokerages have to say about the stock and the company after its September quarter earnings:
Jefferies
The research house maintained hold rating with a target at Rs 3,950 per share as lack of positive surprises in the Q2 results offers limited scope for re-rating.
The Q2 revenue, which was up 4 percent in CC term, slightly missed the estimates, however, with 10 bps rise in margin and 7 percent growth in profit over the previous quarter, the stock was ahead of estimates.
Total contract value (TCV) at $7.6 billion was healthy and the company is confident of a strong growth outlook. In case of software as a service (SaaS) businesses, TCV provides clarity in the volume of business one can expect from a customer after a deal is signed. TCS has managed its margins well, despite supply pressures.
Macquarie
Macquarie has kept outperform call with a target at Rs 4,530 per share after the results marginally missed estimates due to a lower margin on supply-side issues.
It is well positioned to capture the demand strength. The research house has lowered its FY22 estimate for earnings per share (EPS) by 3 percent.
Kotak Institutional Equities
Kotak Institutional Equities has maintained add rating on the stock with a target at Rs 4,100 per share after the company’s revenue missed estimates due to a surprising moderation in growth in continental Europe.
The broking house has cut FY22-24 EPS estimates by 3-4percent and target by 3 percent and it feels that the company is better positioned than its peers to face the margin headwinds.
CLSA
The brokerage has maintained outperform rating with a target at Rs 4,050 per share after Q2 was a tad below estimates on both revenue growth and margins.
CLSA has cut the FY22-23 EPS estimates by 1 percent on modest order book and weak near-term margin outlook. It expects that incremental upside could be limited from current levels.
UBS
The research house has kept the neutral rating on the stock with a target price at Rs 4,180 per share.
It expects the stock to consolidate here with a slight downward bias and if the second half slows further, there may be a risk to FY23 consensus revenue forecasts.
Goldman Sachs
The research house has kept the buy rating with a target at Rs 4,657 per share as earnings were below estimates on revenue, margin and order book front.
It has cut the EPS estimates by 1-2 percent over FY22-26 and sees a strong deal pipeline given strong underlying demand momentum.
At 9.19 am, Tata Consultancy Services was quoting at Rs 3,683.65, down Rs 251.65, or 6.39 percent, on the BSE.
Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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