Margin Concerns Dent TCS Earnings Estimates
Shares of Tata Consultancy Services (TCS), India’s largest IT company, dropped 2.8%on Wednesday as analysts reduced their earnings estimates on account of lower operating margins. This is despite the fourth-quarter profits beating expectations and revenue being reported in line, snapping a six-quarter Credit We prefer lead to a delayed re-rating of the stock. IIFL cut FY17/18 EPS estimates by 2% due to lower Q4 margins.
HDFC Securities said it prefers Infosys and HCL Tech among IT large caps; while Phillip Capital said though TCS is trading at par with Infy it sees this parity changing into a discount over the next 12 months.
Buy Our relative preference is for Infosys on better earnings defense and technical factors
We expect 4Q results
TCS is trading over the next
Expect spree of disappointing results. Analysts see potential risks to TCS’ margins going ahead, despite the management maintaining overall margin outlook due to wage hike and visa costs in 1Q FY17. Many believe that investors will compare earnings growth of TCS with competition, and this will Infosys and HCL do not
Neutral at par with Infosys, but twelve months
Buy indicate a case for upward stock
Accumulate growth rates to converge
Accumulate We have moderated our margin expectations
J.P. Morgan Morgan Jefferies Macquarie HDFC Securitie JM Financial ICICI Centrum Broking Phillip Securities Dolat Capital Market Kotak