Most analysts tracking Tata Consultancy Services (TCS) Ltd. maintained their recommendations on the stock after its September quarter results were reported after market hours on Wednesday, October 11.

TCS reported its first decline in US Dollar revenue in over three years or 13 quarters. The majority of the analysts believe that the near-term visibility for the company remains low and that the situation is unlikely to improve in the current financial year.

Of the 46 analysts that track TCS, 24 of them have a "buy" rating, 13 say "hold," while nine of them have a "sell" recommendation.

Brokerage firm Nomura maintained its reduce rating on the stock with a price target of Rs 3,030. Nomura's price target implies a potential downside of 16% from TCS' closing price on Wednesday.

Nomura analysts wrote in their note that although the order book is holding up for the company, the near-term visibility remains low. TCS reported deal wins worth $11.2 billion for the quarter. The brokerage does not expect the company to hit a 25% EBIT margin for the current financial year.

Citi has also maintained its sell rating on the stock with a price target of Rs 3,170. The brokerage wrote that cost discipline and headcount reduction would have aided the 110 basis points expansion in the company's EBIT margin during the quarter.

It has also lowered its full-year constant currency growth estimates to 3.5%, adding that deal wins become difficult to interpret due to a lack of accurate data on "duration" and "new versus renewal."

However, Bernstein has maintained its outperform rating on the stock with a price target of Rs 3,90. That target is lower than the company's buyback price of Rs 4,150.

Bernstein believes that the deal wins during the quarter sets the platform for the financial year 2025. It listed margin expansion, order book and a large buyback as the key positives during the quarter.

It further added that the buyback announcement should provide some near-term support to the stock.

Morgan Stanley has maintained its equalweight rating but cut its price target to Rs 3,590 citing no respite from macro headwinds. It believes that good execution on the order book is not translating into revenue optimism for the second half of the year, thereby leading to cuts in revenue assumptions.

A better-than-expected performance on margins keeps Earnings per Share estimates cut limited, Morgan Stanley said.

Goldman Sachs also remains bullish on the stock with a buy rating and a price target of Rs 4,020. It has lowered its revenue estimates by up to 1%.

It cited a strong order book for the company, stating that it is reflecting an improving revenue trajectory from the second half of the current financial year.

Shares of TCS ended 0.4% on Wednesday.

(Edited by : Amrita)

First Published:Oct 12, 2023 7:33 AM IST