What Brokerages Have To Say About TCS Q2 Earnings

Here is what some brokerages have to say post the second quarter earnings.

Sajeet Manghat @sajeetkm

11 Oct 2021, 11:12 PM IST

<div class="paragraphs"><p>An employee walks past a signage for Tata Consultancy Services Ltd. (TCS) at the company’s Synergy Park campus in Hyderabad, India. (Photographer: Namas Bhojani/Bloomberg)</p></div>

An employee walks past a signage for Tata Consultancy Services Ltd. (TCS) at the company’s Synergy Park campus in Hyderabad, India. (Photographer: Namas Bhojani/Bloomberg)

Tata Consultancy Services Ltd. reported second quarter profit broadly in line with expectations, though it missed top end forecasts despite bouncing back from disruption in operations caused by the deadly wave of Covid-19 infections .

Here is what some brokerages have to say post the second quarter earnings:

HSBC

Another miss by growing 3.7% at constant-currency terms versus expectations of 4.5%.
On a revenue base of $22 billion annually, this a good performance though street expectation was high for the company and the overall sector.
TCS's results indicate that the Covid-19-led tech-upgrade cycle has improved the mid-term growth outlook for the industry to a 9-10% CAGR over the next 3-years.
Reduced its fiscal 2022 estimates slightly by 2.5% as it factors in 30-basis-point lower margin to reflect the near-term volatility that talent supply will have on profitability.

Morgan Stanley

An all-round miss.
TCS witnessed weak international growth at 2.4% sequentially in dollar terms compared to an expectation of 3.2%.
A sharp increase in attrition rates to 11.9% in the second quarter.
While it onboarded 43,000 campus hires in first half of FY22, the net headcount jumped 19,700 in the second quarter taking the total to 5,28,700.

Antique Stock Broking

While TCS missed on all fronts, the medium-term outlook remains strong.
The miss was led by weak performance in Europe where large projects came to an end, and enhanced offshoring out of Europe because of talent scarcity.
Though margin expanded by 10 basis points, it was below the expectation of 26% as it was impacted by lower growth and supply-side challenges.
Expects TCS' revenue to show organic growth at 15-20% in constant currency in fiscal 2022 and fiscal 2023.
Sees TCS' margin to remaining largely stable in FY 2022-2023.
Cut its earnings per share estimate by 1% in line with the Q2 earnings miss.

→ TCS Q2 Brokerage Reviews

Growth Optimism Intact, But Near Term Hiccups Limit Upside: Motilal Oswal

Outlook Continues To Be Positive Backed By Execution Prowess: Axis Securities

Margin Expansion A Positive Surprise: ICICI Direct

Is Peak Of ‘Compressed Transformation’ Behind Us: Nirmal Bang's Take

Minor Blip, Well Positioned To Gain Market Share: Prabhudas Lilladher

Growth Momentum To Continue, Aided By Growth Across Verticals, Large Deal Wins: KRChoksey