Analysts say company will beat peers in the earnings race

The Street seems to have sensed Tata Consultancy Services (TCS) will post a stellar performance in the second quarter if the rise in its share price on Monday is anything to go by. The IT bellwether’s share price soared to an all-time high of Rs 2,214.65, a day ahead of its second quarter earnings announcement.

Analysts said the Tata group company’s earnings for the July-September quarter will be much better than its peers.

“This is one company that has been setting the trend for the sector, and it has been living up to investors’ expectations. TCS does not have any company-specific issues, and I think growth would be broad-based across geographies and service lines,” Ankita Somani, IT analyst at Angel Broking, said.

On a consensus basis, analysts are expecting the company to post an 18 per cent rise in net profit and a 5.4 per cent rise in revenues (on quarter-on-quarter basis) in US dollar terms. Most brokerages have a ‘buy’, while some have a ‘hold’ rating on the Tata group company.

“As there is a momentum both in the market and within the company, one can conclude that Q2 would also be a sterling quarter for TCS,” Alok Shende, Director and Principal Analyst at Ascentius Consulting, said.

However, Shende said the company’s intent to focus on India’s small and medium businesses through its ‘iON’ programme has been a failure. “Its plan of achieving $1 billion in revenues (from iON) by 2015 does not look feasible,” he said.

Ahead of the TCS earnings, most technology stocks, including Infosys (up 1.5 per cent), Wipro (2.58 per cent) and Tech Mahindra (0.57 per cent) ended higher on Monday.

“IT and pharma are the most preferred sectors now,” Alex Mathews, head of research at Geojit BNP Paribas Financial Services, said adding, investors’ expectations are reflected in TCS’ share price movements.

(This article was published on October 14, 2013)
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