IIFL Institutional Equities, a part of the IIFL Group, one of the leading players in the Indian financial services space, recommends “Reduce” TCS.
According to IIFL Institutional Equities report, our channel checks and commentary from other IT vendors during last week indicates a worse-than-expected environment for BFSI. TCS has the highest exposure from BFSI (43% of its revenues) among Indian IT vendors.
While we expect TCS to continue to witness the fastest growth, in a lacklustre demand environment, we see the gap in its growth rates versus other top vendors reducing in FY14/15, IIFL report stated.
Valuations are still at a high premium (20-40%) to other vendors. We expect them to moderate and see the stock price languishing. Downgrade to REDUCE, the brokerage added.
The report was published by IIFL’s Institutional Equities Research desk.