TCS shares: What CEO Rajesh Gopinathan’s surprise resignation means for the IT stock

,Rajesh Gopinathan He 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%/14%/14% over FY22-25E.” TCS shares at target price of 3,607.

The announcement is surprising given Mr. Gopinathan’s track record and long association with TCS. Nevertheless, analysts at Nuwama Research believe that TCS has one of the strongest leadership benches in the industry; Therefore, the transition will be as smooth as Mr. Gopinathan taking over the reins from Mr. Chandrasekaran, who was promoted as chairman of the Tata Group.

“However, we see this as a continuation of a trend at TCS, in which the baton will be passed from one veteran to another. In the 55-year history of TCS, Mr. Krithivasan will be only its fifth CEO—a testimony to the stability of its management and There is evidence of quality. 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 ‘Buy’ on the IT stock while maintaining the target price 4,100.

The views and recommendations given above are those of individual analysts or broking companies and not of Mint.