Tata Consultancy Services Ltd.

Edelweiss maintains hold on TCS

The absence of pick up in spending in BFSI is surprising given the rise in interest rates in the North American market and improving profits, particularly in the BFSI space. Stagnant new spends imply further delay in decision making and awarding of new deals. We believe, this coupled with continued pain in retail (although temporary) implies lower growth for the sector and in particular for TCS, Infosys and Wipro, which draw substantial portion of revenue from these segments. We will keenly monitor quarterly earnings & commentary and maintain that TCS is a dividend play until margin stabilises and demand environment improves in spite of its best-in-class execution.