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TCS gained 10% in Sept: Is it time to exit? Experts analyse

Dipan Mehta, Member – BSE & NSE says that September is anyway seasonally a strong quarter for TCS. It is the quarter with highest margins and with the rupee now depreciating, the stock will get some currency headwinds.

Software exporters such as  TCS Infosys HCL  gained late trade on Wednesday on hopes of weakness in currencies against US dollar that would aid margins from overseas.

IT stocks have also been riding high on the euphoria that the second quarter earnings will be better. Goldman Sachs has said that Q2 is a seasonally strong quarter for Indian IT and current market expectations from some large-cap peers appear subdued.

Concurring the view, Dipan Mehta, Member – BSE & NSE says that September is anyway seasonally a strong quarter for TCS. It is the quarter with highest margins and with the rupee now depreciating, the stock will get some currency headwinds.

Tata consultancy services (TCS) being the leader of the IT pack, has gained over 10 percent this month. With social mobility analytics and cloud (SMAC) making a comeback as a USD 200 billion opportunity in the US where TCS has a strong hold, P Phani Sekhar, Fund Manager-PMS, Angel Broking maintains a bullish stance on the stock. As of now, it contributes to only 10 percent but they are growing more than 50 percent CAGR. Sekhar further sees this aiding revenue growth at 35 percent in 1-2 years.

Whilst one remains invested in TCS at this point in time and no doubt the stock may have run up, but Mehta feels the stock is now catching upto the market, adds Mehta in an interview with CNBC-TV18’s Senthil Chengalvarayan and Menaka Doshi.

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