Last updated: March 17, 2023, 12:44 PM IST
The resignation of Rajesh Gopinathan, CEO of Tata Consultancy Services (TCS), comes as a surprise to The Street. IT giant announced the appointment of K Krithivasan as the new CEO for TCS. K Krithivasan will go through a transition period at Rajesh Gopinathan and will be appointed as MD & CEO in the next financial year.
Shares of Tata Consultancy Services fell slightly in morning trading on Friday.
On the BSE, the scrip opened at Rs 3,151 after closing at Rs 3,184.75 on Thursday. After hitting an intra-day high of Rs 3,194, the stock fell 0.62 percent to Rs 3,165.
The market valuation of TCS, a major constituent of Sensex, was Rs 11,58,419.07 crore on the BSE.
On the NSE, the company fell 0.47 percent to Rs 3,169.90. It had opened at Rs 3,150.50 after finishing the day at Rs 3,185 on Thursday.
Here’s what analysts are saying about the TCS stock
Citi has maintained a sell call on TCS citing Gopinathan’s resignation as a surprise for D-Street. K Krithivasan’s appointment should be more about continuity, it noted, adding that Krithivasan has been in TCS for 34 years now. Any changes to strategy made by him will be eagerly awaited, the brokerage firm went on to say.
Given the relatively limited interactions with investors, The Street will eagerly look forward to interacting with the appointed CEO, Citi said. TCS shares traded at Rs 3,167.05 on the NSE and are down Rs 17.95 or 0.56 per cent from Thursday’s closing price.
“Rajesh Gopinathan was reappointed as CEO last year and therefore his resignation comes as a surprise and is likely to be perceived negatively. However, Krithivasan’s expertise in BFSI and 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 delivered strong revenue growth, deal pipeline and improving margins in recent quarters. We expect TCS revenue/EBITDA/PAT to grow by 13 percent/14 percent/14 percent between FY22-25E,” said Centrum Broking, which maintained its ADD rating for the TCS stock at a target price of Rs 3,607.
Nuvama Research analysts believe that TCS has one of the strongest leadership banks in the industry; hence the transition will be as smooth as when Gopinathan had taken over the reins from Chandrasekaran who was promoted to Chairman of Tata Group.
“However, we see this as a continuation of a trend at TCS, where the baton is passed from one veteran to another. In TCS’s 55-year history, Krithivasan will be only the fifth CEO – a testament to the stability and quality of management. We see no disruption to this management transition. Any drop in share price should be taken as an opportunity to add as valuation is no longer expensive, making the risk-reward profile attractive,” they added, maintaining ‘Buy’ on the IT stock with a target price of Rs 4,100.
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