TCS Earnings: Miss as Discretionary Consulting Spending Remains Conservative; Shares Overvalued

Wide-moat Tata Consulting Services' second-quarter results missed our top- and bottom-line expectations as customers remained conservative on spending amid macroeconomic uncertainty, which we believe will persist over the next few quarters. We are maintaining our INR 2,960 fair value estimate. The shares saw little movement after results, leaving the IT services giant trading in overvalued territory, in our view. Nonetheless, we believe TCS is a high-quality firm with a trio of resilient moat sources.