TCS falls over 5% after revenue growth misses estimates

Tata Consultancy Services shares fell as much as 5 per cent on Friday after the company missed consensus dollar revenue forecast for the first time in two years. TCS, India's largest outsourcer, had announced its third quarter results yesterday.

TCS dollar revenues rose 3 per cent quarter-on-quarter to $3,438 million in the December quarter, lower than estimates of 3.5 - 4 per cent growth.

(Read: TCS net up at Rs 5314 crore in Q3, but revenue growth slows)

Credit Suisse said the numbers are solid, but lack any positive surprise in quarter.

As of 11.30 a.m., TCS shares traded near the day's low of Rs 2,235. The stock underperformed the broader BSE IT benchmark, which traded 2 per cent lower. (Track stock)

Operating margins for TCS stood at 29.7 per cent in Q3, slightly below than September quarter margins of 30.2 per cent. TCS management said margins are expected to be in the 27-28 per cent in the medium term.

CLSA said TCS continues to be the best executor in the IT sector, but added that the stock is likely to remain range-bound. The brokerage has an "outperform" rating on the stock with a target of Rs 2,525.

Macquarie also maintained its "outperform" call on the stock (target Rs 2,600) citing strong FY15 guidance by the management.

TCS has said its dollar sales will be higher in 2014-15 as compared to the current fiscal year. (Also read: TCS ups hiring target)