Global research and brokerage firms CLSA and Deutsche Bank are bullish on the shares of Tata Consultancy Services, after India’s IT bellwether posted its second quarter (July-September) earnings yesterday, which beat analysts’ expectations as consolidated profit rose, backed by robust volume growth and operational performance. CLSA has retained a buy call on the stock, increasing the target price to Rs 2,970, from the previous target of Rs 2,880. TCS shares continued to rise on Friday morning, and were trading at Rs 2,580.75 on NSE, up by more than 1.2% since the previous close.

Tata Consultancy Services (TCS) was trading 2% higher at Rs 2,510 on the BSE in an otherwise subdued market ahead of July-September quarter (Q2FY18) results on Thursday, October 12, 2017.

Since July 13, 2017, post April-June (Q1FY18) results, the stock was marginally up by 0.63% against 0.35% decline in the benchmark S&P BSE Sensex till Tuesday.

As Tata Consultancy Services (TCS) is squeezed by the Donald Trump administration to reduce the use of overseas workers for US jobs, TCS is also fighting claims in court that its hiring practices are anti-American.

TCS, Asia’s largest software maker, and Infosys are both embroiled in civil rights lawsuits accusing them of discriminating against white IT workers that predate Donald Trump’s election last year.

BENGALURU | MUMBAI: Tata Consultancy Services (TCS) is creating a product brand for its artificial intelligence (AI) product Ignio and has hired from US companies to drive sales of the standalone product, a move that analysts say is akin to building a software company with a different model to its traditional services.

The company is working to ensure the Ignio brand is a standalone — with a separate website that has minimal TCS branding. Digitate, the unit that houses Ignio, is only once referred to as a TCS venture.

The latest financial performance of the big three of Indian IT industry—Tata Consultancy Services (TCS) , Infosys and Wipro—underscores the fact that the macro-economic challenges still persist with business momentum not picking up and net profits dropping. In short, the prospects of a double digit growth rate is still far away. The first quarter of FY18 for this top three companies has been consistent on one point —declining net profits. If TCS’s net profit dropped on a quarter-on-quarter (QoQ) basis by 10%, it was 3.3% for Infosys and 8% in the case of Wipro. The twin factors which affected their bottomline performance were wages hikes and the appreciating rupee against the US dollar.

Tata Group, the Indian conglomerate that manages more than 100 operating companies, is weighing a plan to streamline its information technology and infrastructure businesses, people with knowledge of the matter said.

The conglomerate is considering a restructuring that would see several of its IT businesses moved under publicly traded Tata Consultancy Services (TCS), according to the people. Tata group, which wants to reduce the number of companies it oversees, may sell some smaller units that don’t fit with its strategy, the people said, asking not to be identified because the information is private.

Reliance Industries, the most valuable firm on the bourses, added another feather in its cap by crossing the Rs 5 lakh crore market-capitalisation for the first time in its trading history.

It has become the second only firm to do so after Tata Consultancy Service (TCS), which is now the second most valuable company in terms of market-capitalisation.

Shares of Wipro rose over 3% in the early trade on Monday after the third largest IT services firm Wipro on Friday said its board will consider a proposal for buyback of equity shares on July 20.

Reacting to the development, the stock of the company gained as much as 3.2% to Rs 268 on the BSE. The stock was the top gainer on Sensex and Nifty.

The heavyweight IT companies TCS and Infosys have capped the previous two-day gains and are dragging the Nifty IT index down ahead of the first quarter earnings. Stocks of IT companies mostly trade up except TCS which was down 0.89% at Rs 2,453.8 while Infosys shares were mostly flat, down 0.11% at Rs 974.25. NSE’s Nifty IT index trade slightly under pressure, down 0.14% at 10,415.1 points.

The $150 billion Indian IT industry is expected to have a sedate start this fiscal, with the first quarter results of top tier companies like TCS, Infosys and Wipro commencing this week. Analysts believe that revenue growth will be subdued and operating profit margins will be under stress in the April-June period, with the demand environment yet to pick up pace. EBIT margins in the first quarter may compress by up to 260bps for large-caps, primarily due to rupee appreciation, wage increases, and visa costs.

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