TCS Investment Strategy: Rajesh Gopinathan, MD and CEO of Tata Consultancy Services (TCS), the country’s largest IT company, has resigned. This was quite a shocking announcement and its effect was also visible on the shares of the company on Friday. It closed lower even in a strong market sentiment. In such a situation, what strategy to adopt for investment, brokerages are giving this advice.
TCS Investment Strategy: Rajesh Gopinathan, MD and CEO of Tata Consultancy Services ( TCS ) , the country’s largest IT company, has resigned. This was quite a shocking announcement and its effect was also visible on the shares of the company on Friday. The BSE Sensex closed at 57,989.90 yesterday, up 0.62 per cent on March 17. On the other hand, TCS shares closed at Rs 3178.95, down 0.18 per cent.
In the intra-day, it had slipped up to Rs.3145. However, market experts have advised investors to stay put instead of selling stocks in panic. Domestic brokerages are betting on this and according to the target given by them, this stock can climb up to 20 per cent above the current level ie Rs 3810.
Who is now the MD-CEO of TCS ?
On March 16, K Krithivasan was made MD-CEO of the company after Rajesh Gopinathan, who held the responsibility of MD and CEO in TCS for 6 years, resigned from his post. Krithivasan was earlier the company’s President and Global Head of the Banking, Financial Services and Insurance (BFSI) business group. He has been associated with the company for more than 34 years.
What do brokerages say
According to ICICI Direct, under the leadership of the new MD-CEO, the focus will be on customer acquisition and retention, thereby increasing the company’s market share. The company is expected to grow its revenue at a CAGR (compound annual growth rate) of 11 per cent in rupee terms in FY2022-25 on the back of increasing outsourcing, vendor consolidation and deal pipeline in Europe. ICICI Direct expects margins to improve from FY23 on the back of moderation in subcontractor costs and improvement in utilisation. ICICI Direct has fixed a target price of Rs 3780 on TCS based on double digit return ratios, strong cash generation and healthy payout estimates.
On the other hand, according to Motilal Oswal, the increase in interest rates, sluggish economic growth and increasing political tension globally have increased the problems of the IT sector but TCS is able to deal with it. The brokerage firm has placed its bet on TCS on the basis of its size, order book and long duration orders and portfolio. In such a situation, Motilal Oswal has given a buy rating on it with a target price of Rs 3810.
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