MUMBAI: Brokerages are mixed on Tata Consultancy Services after the IT major's June quarter result disappointed investors.
Investec downgraded the stock to 'sell' from 'hold' and Macquarie downgraded the stock to 'neutral' from 'outperform'.
CLSA maintained 'outperform' rating and Edelweiss maintained 'buy' rating. Morgan Stanley maintained 'equalweight' rating. Motilal Oswal and Nomura are 'neutral' on the stock and Kotak Institutional Equities maintained 'reduce' rating.
"TCS’s June’20 quarter performance reflected the sharp disruption in the business due to Covid-19 as expressed by management after FY20 results. A 6.9% sequential fall in cc (constant currency) revenue was worse than Street estimates of around 5.2% decline," said Emkay.
High valuation emerged as a concern for many brokerages.
Bank of America Securities expects the stock to be range bound given fair valuation post the recent upmove.
ET Bureau
Investec expects other tier-1 IT companies to benefit from TCS' positive commentary but current valuations leave no margin of safety.
CLSA retained outperform rating but said that rich valuations could limit upside. However, strong cash generation could lead to the stock outperforming the broader market, said CLSA.
