TCS slips over 4% on concerns of weak October-December quarter
The third quarter of the fiscal is traditionally weaker for IT firms as business is impacted by low volume growth amid holidays and furloughs in the US and Europe.
By ET Online | Updated:
NEW DELHI: Tata Consultancy Services Ltd (TCS) plunged as much as 4.04 per cent in intraday trade on Monday, after the country's largest software services firm expects its revenue in the October-December 2014 quarter to be 'in line with seasonal trends'.
The third quarter of the fiscal is traditionally weaker for IT firms as business is impacted by low volume growth amid Christmas and New Year holidays and furloughs in the US and Europe.
"Q3 2015 revenue expected to be in-line with seasonal trends. Retail, Manufacturing and Hi-Tech likely to see impact of holidays and furloughs," TCS said in an investor presentation.
It added that banking, financial services and insurance continue to be impacted. While, the company expects telecom and smaller verticals to grow better than the company average.
On geographies, TCS said the demand environment in North America is in-line, adjusted for seasonal weakness.
The IT major anticipates furloughs to take a toll on retail, high tech and manufacturing, while insurance and banking products will continue to remain soft. However, telecom and other smaller verticals are slightly better.
"Moreover, cross currency impact will dent USD revenue by 220bps, higher than earlier expected. US demand is in line, adjusted for seasonality, while Europe is slightly better," Edelweiss said in a report.
"We maintain our positive outlook on TCS owing to the ensuing economic recovery in the US and improving demand from Europe underpinned by the company's robust execution capabilities," added the report.
The brokerage firm maintains 'buy' rating on the stock with target price of Rs 2,848 (20x FY16E EPS).
The third quarter of the fiscal is traditionally weaker for IT firms as business is impacted by low volume growth amid Christmas and New Year holidays and furloughs in the US and Europe.
"Q3 2015 revenue expected to be in-line with seasonal trends. Retail, Manufacturing and Hi-Tech likely to see impact of holidays and furloughs," TCS said in an investor presentation.
It added that banking, financial services and insurance continue to be impacted. While, the company expects telecom and smaller verticals to grow better than the company average.
On geographies, TCS said the demand environment in North America is in-line, adjusted for seasonal weakness.
The IT major anticipates furloughs to take a toll on retail, high tech and manufacturing, while insurance and banking products will continue to remain soft. However, telecom and other smaller verticals are slightly better.
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"Moreover, cross currency impact will dent USD revenue by 220bps, higher than earlier expected. US demand is in line, adjusted for seasonality, while Europe is slightly better," Edelweiss said in a report.
"We maintain our positive outlook on TCS owing to the ensuing economic recovery in the US and improving demand from Europe underpinned by the company's robust execution capabilities," added the report.
The brokerage firm maintains 'buy' rating on the stock with target price of Rs 2,848 (20x FY16E EPS).
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