TCS: Shapoorji’s Exit Rings Alarm

India’s largest software services exporter Tata Consultancy Services (TCS) share price continues to reel under pressure from the last two trading sessions as Shapoorji Pallonji Group (SPG) sold 19.5 lakh shares in stock markets most valued companies.

The second block deal in a month for SPG.
On December 5, Shapoorji Pallonji, via its holding company, sold 19.9 lakh shares of TCS.

The move led to the fundraising of Rs 400 crore.

Before the first block deal, Shapoorji Pallonji held 74.45 lakh shares in TCS.

Post both block deals, Shapoorji Pallonji now holds 34.05 lakh shares in TCS.

The decision was taken by SPG with a view to strengthening the balance sheet.

SPG faces liquidity pressure and the long-term ratings of its holding company Sterling and Wilson Energy was downgraded after it sought revision in repayment schedule of inter-corporate deposits

Given the SPGs current financial conditions and its desperation for funds, it is likely that TCS share price will continue to trade soft.

Meanwhile, the Tata Group firm clinching deals in Europe, its efforts on localizing talent pool and the latest victory of UK’s Conservative party in the general election could help tame the price slide.

However, do these short term developments impact TCS?

We believe that this short term development is unlikely to impact the business fundamentals of the company as these continue to remain solid.

The company is making conscious efforts to increase its footprint in the digital space and is making increased investments in this space

Hence this drop in stock price is likely to be temporary and the stock is likely to get rerated in future

Disclaimer –
This document is meant for the recipient only for use as intended and not for circulation. This document should not be reproduced or copied or made available to others. The information contained herein is from the public domain or sources believed to be reliable. While reasonable care has been taken to ensure that information given is at the time believed to be fair and correct and opinions based thereupon are reasonable, due to the very nature of research it cannot be warranted or represented that it is accurate or complete and it should not be relied upon as such. Also above note is not a recommendation to Buy or SELL and is only a view based on facts and figures and we will be in no way responsible for any losses incurred by anyone who uses this information to either trade or invests securities mentioned herein.