TCS Q3 Results: Brokerages Remain Cautious Over Weakness In Key Verticals
Signage for Tata Consultancy Services Ltd. is displayed outside the company’s headquarters in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

TCS Q3 Results: Brokerages Remain Cautious Over Weakness In Key Verticals

Most analysts remained concerned over weakening key verticals and lofty valuations at India's largest software services company even as its third-quarter profit met estimates.

Tata Consultancy Services Ltd.’s operating margin rebounded from a nine-quarter low on the back of a weaker rupee and cost efficiencies.

TCS Q3 Results: Brokerages Remain Cautious Over Weakness In Key Verticals

Also read: TCS Q3 Results: Profit Meets Estimates, Margin Rebounds From Nine-Quarter Low

Here’s what the brokerages had to say:


  • Maintaining ‘Sell’ on weak Q3 results; Target Rs 1,975.
  • Banking, financial services and insurance and the U.K. business were particularly sluggish with declines sequentially.
  • Impacted by challenges in BFSI and retail, expectations still remain elevated.

Credit Suisse

  • Raise target to Rs 1,950 from Rs 1,892, Maintain ‘Neutral’ on third successive revenue miss.
  • BFSI and retail-led growth moderation continues; EBIT margin at 25 percent surprised positively.
  • Don’t expect a pick up anytime soon with persistent BFSI headwinds.
  • Valuations remain steep at 24x and are concerning.


  • Raise target to Rs 2,175 from Rs 2,137, Maintain ‘Hold’.
  • Revenue deceleration in BFSI and North America overshadows margin performance.
  • Operating margin expanded, aided by a lower headcount.
  • Expensive valuation and lack of margin levers keep us wary on the stock.

Goldman Sachs

  • Cut target to Rs 2,063 from Rs 2,076; Maintain ‘Neutral’
  • Expected to face cyclical demand downturn in its key industry verticals over the next few quarters.
  • Stock is currently trading at 23.7x earnings per share estimate for FY21 versus Indian IT sector at 16.5x.

Also read: HCL Tech Q3 Results: Brokerages Raise Target Price As Profit Beats Estimates


  • Raise target to Rs 1,950 from Rs 1,900, Maintain ‘Hold’ on headwinds and valuations.
  • Soft revenue growth, led by tepid banking business, particularly in the U.S./U.K. large banks.
  • TCS may, at some stage, need to offer higher deal flexibility to revive growth.
  • Management expects the U.K. business to revive in the coming quarters with improving political certainty.


  • Maintain ‘Reduce’; Raise target to Rs 2,020 from Rs 1,900 on rollover to 2021 EPS.
  • Moderation in growth and on expected lines for Q3.
  • Weak revenue growth impacted by slowdown in financial services and technology verticals.
  • TCS is an excellent business. However, current valuations are expensive.
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