TCS slips 3% after 21 mn shares change hands in block deals on BSE

At 09:15 am; around 20.93 million equity shares representing 0.58 per cent of total equity of TCS changed hands on the BSE, the exchange data showed.

Shares of Tata Consultancy Services (TCS) slipped 3 per cent to Rs 4,021.25 on the BSE in Tuesday's intra-day trade after nearly 21 million shares changed hands via block deals.

At 09:15 am; around 20.93 million equity shares representing 0.58 per cent of total equity of TCS changed hands on the BSE, the exchange data shows. Till 09:43 am; around 25.13 million shares were traded on the BSE. The names of the buyers and sellers were not ascertained immediately.

According to media reports, Tata Sons was to divest a 0.65 per cent stake in its flagship TCS in the open market. It will offload 23.4 million shares at a floor price of Rs 4,001.

As per reports, Tata Sons has mandated foreign broking majors Citigroup Global Markets and JP Morgan India to sell up to 23.4 million TCS shares, representing 0.65 per cent of the company for about Rs 9,362 crore ($1.1 billion) through block deals. After the transaction, Tata Sons will hold a little less than 72 per cent in TCS, down from 72.4 per cent it was holding as of December 2023.

Thus far in the calendar year 2024, TCS has outperformed the market by gaining 6 per cent, as compared to 0.3 per cent rise in the S&P BSE Sensex. The stock had hit a record high of Rs 4,254.45 on Monday, March 18.

TCS is aspiring to reach $50 bn revenues by FY30 i.e ~8.6 per cent CAGR, to be aided by continued spending by global organisation on cloud transformation. TCS, despite the headwinds in the global macro environment, continues to win TCV and is one of the key beneficiaries in the sector due to vendor consolidation & cost optimisation deals, according to ICICI Securities.

According to technical analyst at the brokerage house, a key observation is that the stock has posted breakout from 26-month consolidation (Rs 3,990 - Rs 2,930) indicating the beginning of a structural uptrend. Recently stock has formed a higher base above 10-week EMA that has been held twice since November 2023 indicating inherent strength.

The brokerage firm expects, the stock to head towards Rs 4,495, over next few months, being 138.2 per cent external retracement of January 22 - February 22 decline (Rs 4,043 - Rs 2,926).

Subsiding macro-concerns is key to growth recovery as deal signings for TCS remain strong. However, its performance on margins has been far more encouraging, as it saw a solid expansion despite sluggish revenue growth. TCS is confident of further margin expansion with cost reduction, lower sub-contracting and better utilisation as key levers, analyst at BNP Paribas said in Q3 result update. The brokerage firm said it likes TCS, as the continuation of strong deal wins shows its strength in cost-optimisation projects.