TCS gains 2% after UK supermarket chain Morrisons expands strategic pact

Shares of Tata Consultancy Services (TCS) gained 2 per cent to Rs 2,523 on the BSE on Tuesday after the company said it has expanded its partnership with Morrisons, a leading supermarket chain in the UK, through a five-year contract for application management services, data services and cyber security services.

The stock of the Tata group's IT services major was trading close to its record high level of Rs 2,538, touched on September 15, 2020.

TCS said the partnership will help accelerate the latter’s plan to simplify and modernise its technology to improve the shopping trip, eliminate wasted effort and become more popular and accessible to its customers.

As part of the expanded partnership, TCS will harness the power of AI and machine learning to augment human teams, improving operational resilience, and boosting productivity. Additionally, adoption of automation and DevOps will increase the speed to market of innovative features that enhance customer experience and provide competitive differentiation, it said.

In the past month, the stock has outpaced the market by gaining 12 per cent, as analysts expect TCS to report improved growth in coming quarters, mainly led by receding challenges on the supply side, ramp up of deals, vendor consolidation opportunities and traction in BFSI. The company also expects cloud, customer experience, automation and cyber security related digital technologies to gain traction in the long term. In comparison, the S&P BSE Sensex slipped 1.5 per cent during the period.

"We believe TCS could see a decline in FY21E revenues mainly due to a weak first quarter. However, we expect the company to register healthy growth in FY22E mainly led by ramp up of deal pipeline and acceleration in digital technologies", ICICI Securities said. The brokerage maintains 'buy' rating on the stock with a target price of Rs 2,650 per share.