A 0.8% drop in revenues in dollar terms during the January-March quarter (Q4FY15) notwithstanding, IT analysts remain bullish on TCS, the largest software company in India, on its strong execution skills and higher chance of winning large deals.
“Large client additions along with key deal wins came in healthy, while gross employee additions for TCS also remained strong (during the quarter). We continue to assume a stable demand scenario for FY16 in which TCS’ strength in execution should lead to industry-leading revenue growth,” analysts at Barclays India noted. The brokerage has a 12-month target price of Rs 2,975 for the stock, compared to its Friday close at Rs 2,476.
During the past two quarters, the Tata group company’s revenues suffered due to cross currency movements and weakness in insurance, telecom and energy verticals. However, the TCS management is upbeat on expected higher demand in key verticals like banking and financial services, manufacturing and retail. Also, the company expects an increase in budgets for discretionary spending, a report by Edelweiss Financial Services said.
A report by Reliance Securities pointed out that during the quarter, TCS added several large clients, which too was a positive. Although most of the leading brokerages remain bullish on the company, Jefferies India is cautious and feels the stock should trade at Rs 2,450 — a 1% slide from the current level.
