Mumbai: Shares of software major TCS fell by nearly 8% on the bourses on Tuesday after the company reported a 6.1% jump in profit for the September quarter, below market expectations.
The company’s stock started the day on a weak note and then slid further by 7.80% to an early low of Rs 1,032.35 on the BSE.
On the National Stock Exchange, TCS shed 7.64% to an early low of Rs 1,034.65.
TCS on Monday reported a 6.1% growth in consolidated net profit to Rs 2,301 crore for the second quarter ended September 30, 2011. The company had posted a net profit of Rs 2,169.21 crore for the July-September quarter last year.
TCS, which has a weight of 4.70% on the 30-share BSE Sensex, was the biggest drag for the benchmark index in the morning session, with the market barometer plummeting by 286.01 points to 16,739.08 at 10:10am.
“TCS’s results failed to live up to the street’s expectations in our view,” Emkay Global Financial Services said in a research note.
Echoing a similar view, Angel Broking said in a research note, “TCS’s Q2, FY’12, numbers were lower than the street’s expectation.”.
“Institutional holding in the stock is very high, so any kind of negative news impacts the scrip badly. The company’s result failed to cheer the market, as margins and profitability were low,” Ashika Stock Brokers Research Head Paras Bothra said.
However, another brokerage firm, Prabhudas Lilladher, said, “TCS Q2, FY’12, results were in line with our expectations, but lower than consensus estimates.”
The lower-than-expected performance was due to slower growth in Latin America, it added.
Led by the decline in TCS’s scrip, the BSE-IT index was trading at 5,497.51, down 3.05%, and was the top loser among the 13 BSE sectoral indices at 10:20am.