Shares of Tata Consultancy Services (TCS) Ltd. are the top losers on the Nifty 50 index, trading with losses of over 1.5%. The stock is also the biggest contributor to the Nifty 50 downside on Thursday.

 

Revenue Decline
TCS reported a US Dollar revenue decline of 0.2% during the September quarter. This is the first time that this metric declined for the company in over three years.
 
The last instance of TCS reporting a negative US Dollar revenue growth was the Covid-19 quarter of April-June 2020 or the first quarter of financial year 2021.
 
A CNBC-TV18 poll had expected the US Dollar revenue growth to be 0.7% compared to the June quarter.
 
Revenue Uncertainty Despite Deal Wins
The management remained non-committal about the revenue growth picking up in the second half of the year or even in financial year 2025 despite robust deal wins.
 
TCS won deals worth $11.2 billion in the September quarter, the third quarter in a row when TCV stood in excess of $10 billion.
Brokerages Lower Revenue Growth Forecast
While most brokerages have maintained their recommendations on the stock, they have cut their estimates for financial year 2024.
 
Jefferies cut the company’s constant currency revenue growth forecast for financial year 2024 by 70 basis points to 4.3% year-on-year, Citi lowered the same estimate to 3.5% year-on-year.
 
Out of the 46 analysts that track TCS, 24 have a “buy” rating, 13 say “hold,” while nine of them have a “sell” rating. You can read more on this here.
 
Headcount Drop Most In Two Decades
TCS headcount fell by 6,333 during the September quarter, the most in two decades.
 
CEO K Krithivasan said that while the company continues to hire, the number of people hired are less than the number who left.
 
“There was no need to hire so many people and hence the headcount was down,” the CEO said.
 
Outperformance Prior To Earnings
The stock may also be witnessing some profit booking as it had outperformed the market ahead of the earnings announcement.
 
During the July-September period, the stock had gained nearly 7%, compared to the 1.5% gain seen on the Nifty 50 index. This was in-line with the Nifty IT surge of 7.5% during the quarter.
 
Shares of TCS are currently trading 1.7% lower at Rs 3,549.50. The stock is down for the second day in a row.