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HSBC maintains hold rating on TCS post earnings

HSBC said the revenue miss was driven by slippage of a large deal in India to the third quarter and overall weakness in the retail business which declined 3.1% sequentially in the quarter.

, ET Bureau|
Updated: Oct 14, 2016, 09.43 AM IST
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The information technology company reported  improvement of 90 basis points in margins from a quarter ago to 26% despite the one-time $26 million litigation charges, said HSBC.
The information technology company reported improvement of 90 basis points in margins from a quarter ago to 26% despite the one-time $26 million litigation charges, said HSBC.
MUMBAI: HSBC has maintained a hold rating on shares of Tata Consultancy Services with a target price of Rs 2,400 following the company's September quarter results.

After market hours on Thursday, TCS reported a dismal 0.3% sequential growth in dollar-denominated revenue in the September quarter due to lower demand from clients in the banking, financial services and insurance (BFSI), and retail sectors and delayed projects in India.

HSBC said the revenue miss was driven by slippage of a large deal in India to the third quarter and overall weakness in the retail business which declined 3.1% sequentially in the quarter.

The information technology company reported improvement of 90 basis points in margins from a quarter ago to 26% despite the one-time $26 million litigation charges, said HSBC.

However, with a stable rupee and weak pound, there is a downside risk yo margins have unless growth accelerates in the coming quarters, said HSBC.

"The company is relatively positive for 3Q/4Q growth as well due to the spillover of the delayed projects but in our view the macro headwinds remain high at this stage and we would wait to get constructive on the stock," said HSBC.

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