TCS falls 14.5% in September ahead of 8 October Q2 results

Tata Consultancy Services Limited shares fell 14.5 percent on NSE in September, from Rs 2,399 to Rs 2,050.60. Q2 FY27 results are due on 8 October. Q1 FY27, last reported (consolidated): - Revenue: Rs 72,275 crore, up 13.9% YoY; in dollars up 2.7%; constant currency up 0.4% QoQ - Operating margin: 24.0% vs 24.5%, after a 170 bps wage hit - PAT: Rs 13,349 crore, up 4.6%, after a Rs 668 crore CSC legal claim provision; up 8.5% excluding it - TCV: $9.5 billion vs $9.4 billion The fall was sector-wide (US rates, visa fees, crude near $100); I found no TCS-specific trigger. Kotak Institutional Equities expects Q2 revenue up 0.5 percent QoQ, margin down about 100 bps YoY and TCV of $10 to 11 billion. TCS [][***** shares closed at Rs 2,015.97 on the linked page on 30 September (NSE Rs 2,050.60), 3.7 percent above the 1 July 52-week low of Rs 1,976.80. P/E 14.65, sector near 20x. My view: hold, not a fresh entry before 8 October. Rupee revenue grew 13.9 percent, dollar revenue 2.7 percent: currency did most of the work. Constant-currency growth was 0.4 percent QoQ; deal wins were flat. That is a 3 percent grower. Valuation is not my worry: 13.4x annualised Q1 profit excluding the CSC provision. Growth is; Q2 is the test. Holders: hold; exit on a close below Rs 1,976.80. Fresh money: wait. If Q2 brings constant-currency growth of 0.5 percent or more, margin near 24 percent and TCV above $10 billion, I would accumulate between Rs 1,976.80 and 2,050; resistance is the 31 August close near Rs 2,399. TCS stays third in my IT ranking, behind Infosys and HCLTech. Disclosure: Vijay Kumar Gupta, SEBI Registered Research Analyst, INH000020226, Vijay Gupta Advisory. SEBI registration and NISM certification do not guarantee performance or assure returns. Securities markets are subject to market risks. No holdings in the subject company.