India's TCS skids on demand recovery worries after Q2 revenue miss

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Key Points

BENGALURU, Oct 12 (Reuters) - Shares of India's Tata Consultancy Services (TCS.NS) fell as much as 1.8% on Thursday, as investors worried that a recovery in demand was still not within reach after second-quarter revenue missed estimates due to weak client spending...

The poor results and commentary from India's largest IT services provider took the shine off TCS' $2 billion share buyback announcement, and also slammed shares of peers...

TCS' revenue rose 7.9% to 596.92 billion rupees ($7.18 billion) in the September quarter, it said after market hours on Wednesday, but fell short of the analysts' estimates of 602.44 billion rupees...

"Broad-based revenue weakness and sharp headcount decline in the second quarter along with muted hiring outlook suggest that demand recovery is not yet in sight," Jefferies analysts wrote in a note, cutting their fiscal 2024 revenue growth forecast by 70 basis points to 4.3%...

The company's profit marginally beat estimates due to higher margins.. Still, Nomura analysts said that weak growth, limited scope to lower subcontract expenses and a return to office for TCS' entire staff would limit margin improvement in the current fiscal year...

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