Last Update: March 17, 2023, 12:44 PM IST
The resignation of Tata Consultancy Services (TCS) CEO Rajesh Gopinathan has come as a shocker to the market. The IT giant announced the appointment of K Krithivasan as the new CEO for TCS. K Krithivasan will undergo a transition with Rajesh Gopinathan appointed as MD & CEO in the next financial year.
Shares of Tata Consultancy Services declined marginally in morning trade on Friday.
On Thursday, the stock opened at Rs 3,151 after closing at Rs 3,184.75 on the BSE. After touching an intra-day high of Rs 3,194, the stock fell 0.62 per cent to Rs 3,165.
Sensex constituent TCS has a market valuation of Rs 11,58,419.07 crore on the BSE.
The company closed at Rs 3,169.90, down 0.47 per cent, on the NSE. It opened at Rs 3,150.50 on Thursday after closing at Rs 3,185 at the end of the day.
Here’s what analysts have to say about TCS stock
Citi has maintained a ‘sell’ call on TCS, describing Gopinathan’s resignation as a surprise to D-Street. K Krithivasan’s appointment should be more about continuity, it said, adding that Krithivasan has been at TCS for 34 years. The brokerage firm further said, the strategy changes, if any, will be eagerly awaited by it.
Citi said that given the relatively limited investor interactions, the Street looks forward to interacting with the CEO-designate. Shares of TCS were trading at Rs 3,167.05 on the NSE, down Rs 17.95, or 0.56 per cent, from Thursday’s closing price.
“Rajesh Gopinathan was reappointed as CEO last year and hence his resignation comes as a surprise and is likely to be viewed negatively. However, Krithivasan’s expertise in the BFSI space as well as the internal promotion of a TCS veteran who has worked closely with the outgoing CEO for over 2 decades should help TCS from a long-term perspective. The company has continued to deliver strong revenue growth, deal pipeline and margin improvement over the past few quarters. We expect TCS’s revenue/EBITDA/PAT to grow at 13 per cent/14 per cent/14 per cent between FY2022-25E.
Analysts at Nuwama Research believe that TCS has one of the strongest leadership benches in the industry; Hence, the transition will be as smooth as Gopinathan taking over the reins from Chandrasekaran, who was promoted as the chairman of the Tata Group.
“However, we see this as a continuation of a trend at TCS, wherein the baton will be passed from one veteran to another. In TCS’s history of 55 years, Krithivasan will be only its fifth CEO—a testament to the stability and quality of its management.” We see zero disruption from this management change. Any dip in the stock price should be used as an opportunity to add as valuations are no longer expensive, which makes the risk reward profile attractive,” he added. Added maintaining ‘buy’ on the IT stock with a target price of Rs 4,100.
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