CITI maintains a Sell rating on TCS with a target price of ₹3,935, citing a muted demand outlook. Key highlights from the analysis include:
- Demand dynamics: Smaller discretionary deals face ROI scrutiny, while mega deals are being divided into smaller contracts.
- The BSNL project, a key revenue driver, is expected to taper off post Q3.
- UK and European markets are witnessing softer demand compared to North America.
Despite these challenges, TCS remains focused on achieving its aspirational 26-28% margin band. Margin levers include favorable currency moves, utilization improvements, and reduced subcontracting costs driven by strategic decisions.
The brokerage remains cautious, highlighting ongoing headwinds in the macro environment and mixed demand trends across key regions.
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TCS