TCS Shares Down On Major CEO Reshuffle News: Here's What You Need To Know

Tata Consultancy Services shares were trading in red on Friday after the country’s largest software service provider announced that Rajesh Gopinathan, managing director & CEO has tendered his resignation after a successful six-year stint.

What Happened? Gopinath who’s been with the company for over 22 years will be replaced by K Krithivasan who’ll assume office as CEO-designate from March 16.

K Krithivasan is currently president and global head of the Banking, Financial Services, and Insurance (BFSI) Business Group at TCS. He joined the IT services giant back in 1989.

TCS in a statement has confirmed that Gopinathan will continue with the company till September 15, 2023, to provide transition and support to his successor.

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"I have thoroughly enjoyed my exciting 22-year tenure at TCS. The last six years of leading this iconic organization have been most enriching and fulfilling, adding over $10 billion (₹82,511.7 crore) in incremental revenues and over $70 billion (₹5,77,591 crore) increase in market cap” said Gopinathan in a statement.

Global Brokerages on TCS: While TCS’ early showing at the bourses on Friday isn’t all positive, analysts don't see any major hiccups in the transition process even though the announcement comes rather unexpectedly.

According to Bernstein Research, the leadership change was unexpected during a challenging macro environment. That said, the brokerage notes that TCS enjoys a premium valuation of 26x 1-year Forward EPS amongst peers and expects the company to continue its strategy on large cost take-out deals under the new CEO. The research firm has an ‘overweight’ rating on TCS at a target price of ₹3,840.

Brokerage Firm CLSA has an ‘outperform’ rating with a target price of ₹3,550 and believes that the transition will be smooth and the company's stable business leadership team should help. It expects minimum business impact due to the change.

Morgan Stanley analysts have a similar view of the development too, with the brokerage settling for an equal-weight rating for the stock at a target price of ₹3,350.

Price Action: Tata Consultancy Services shares were trading 0.78% lower at ₹3,158.05 shortly after markets opened for trading on Friday.

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Posted In: IT servicesK KrithivasanRajesh GopinathTata Consultancy ServicesTCS