Buy TCS on declines, says Mayuresh Joshi

Mayuresh Joshi, VP- Institution at Angel Broking is of the view that one may buy Tata Consultancy Services on declines with a target of Rs 2450.

Mayuresh Joshi, VP- Institution at Angel Broking told CNBC-TV18, "If you look at IT companies the quarter is supposed to be a traditionally weak quarter but our expectations are that  TCS and  HCL Tech should possibly hold up. Ever since the TCS management has come out that the earnings growth might be little bit lesser both to do with the kind of discretionary spending budgets getting firmed up in the US. Again on the domestic side because of the elections the central government spending has come down. So our own expectation in dollar terms is a 2.4 percent sequential growth for TCS and clearly the investments made by TCS into newer geographies, newer products, newer platforms will ensure that the profit margin of the company remains muted. Even the other income should remain lower for TCS this time."

"Our own expectation in terms of absolute numbers I think a 2.5 percent jump in the top line, Rs 21800 crore. We are looking at EBITDA margins of close to 27 percent for TCS. So though it trades at a premium to IT companies and overall to the Sensex valuations as well I think the premium would be justified. So our expectations are that if the stock declines from the current levels it becomes a good opportunity to buy into TCS with a price target of Rs 2450."

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