A security guard stands outside the Tata Consultancy Services Ltd. headquarters in Mumbai, India (Photographer: Dhiraj Singh/Bloomberg)  

TCS Extends Decline Despite Strong Q2 As Brokerages Remain Split

Shares of Tata Consultancy Services Ltd. extended declines for the third session and are poised for their longest losing streak since July.

TCS returned to double-digit full year revenue growth of 11.5 percent in constant currency terms, CEO Rajesh Gopinathan said, calling it a “landmark quarter”.

Yet, brokerages remained split on the country’s largest software exporter. TCS’ second quarter earnings performance was strong but not enough for upward earnings revisions, said brokerage Credit Suisse.

“One thing we can take from the management’s tone is that things are improving for the company and that should show up with some lag,” Milan Desai, analyst at IIFL Securities, told BloombergQuint.

Also read: Q2 Results: TCS’ Profit Rises After Margin Hits Seven-Quarter High

Here’s what brokerages had to say:


  • Maintains ‘Buy’ with a target price of Rs 2,600, implying a potential upside of 31 percent.
  • The second quarter showed strong growth and an improving growth outlook.
  • Strong revenue growth led by improving banking, financial services and insurance and retail segments.
  • Margin expansion slightly lower as TCS invests to exploit demand.


  • Maintains ‘Outperform’. Cut target price to Rs 2,345 from Rs 2,350 to factor in lower other income; a potential upside of 18 percent.
  • Double-digit revenue growth momentum driven by the ramp-up of large deal wins.
  • Growth momentum has been picking up in the BFSI vertical.


  • Maintains ‘Reduce’ with a target price of Rs 1,950, a potential downside 1.5 percent.
  • Second-quarter revenue growth was below expectations, while margins were in line.
  • Expects marginal downside to growth numbers.
  • Prefers HCL Tech as only ‘Buy’.

Credit Suisse

  • Maintains ‘Neutral’ with a target price of Rs 1,775 and a potential downside of 10 percent.
  • Strong second quarter results but not enough for upward earnings revisions.
  • Well-placed in digital technologies but no pick-up in financial services.
  • No concerns yet around trade wars and Brexit.

Deutsche Bank

  • Maintains ‘Hold’ with a target price of Rs 1,740 and a potential downside of 12 percent.
  • Revenue growth accelerates, management signals good visibility for the ongoing financial year.
  • U.K. and Europe have maintained strong growth rates.
  • Robust operating metrics; digital is now 28 percent of revenues.

Shares of TCS are trading 3.12 percent lower at Rs 1,918 apiece on the BSE. The scrip is also the worst performer on the Sensex and the Nifty, according to Bloomberg data.