India's IT behemoth Tata Consultancy Services (TCS) reported its second-quarter results on Thursday. The company has reported a constant currency revenue growth of 8.4% year-on-year for the quarter ending September 30, 2019. It reported a lower-than-expected September-quarter profit, due to lesser spending by financial clients. The board has also announced a dividend of Rs 45 per share, including a special dividend of Rs 40 per share, according to the company filing with the BSE. Talking about the TCS share price, it closed at Rs 2,002.80 on Thursday, while the impact of results will be seen on Friday's trade.

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Emkay Global Financial Services has put a HOLD rating on TCS stock as of now, with a target price of Rs 2,050. While the stock has been weak in the run-up to results; It can be a case for more downsides in the near term. Why it gave that rating? Emkay revealed in a statement: ''Miss on operational front; confirm the weakness in the sector in our view''.

''TCS’s Sep'19 quarter operating performance was weak on both growth and margins. A 1.6% QoQ c/c growth in Q2 is the lowest sequential growth in the past 2 years and confirms the weakness that the Street has generally been worried about due to the macro backdrop. EBIT margins slipped to 24%, down 20 bps QoQ are the lowest since June’17 levels and reflect the impact of revenue pressure along with the build-out of offshore bench as the industry continues to see increased offshoring,'' it added.

Emkay further added, ''Sep’19 quarter confirm the risks to the company’s earlier suggested outlook of double-digit growth and we would reckon that the street will align FY20 revenue growth to more than 9% YoY c/c growth post these results. We see marginal cuts to our FY20/21E EPS of Rs 90/99. While the stock has been weak in the run-up to results; we see for more downsides in the near term. We currently have a HOLD rating on TCS with a TP of Rs 2,050.''
 
Commenting on the Q2 performance, Rajesh Gopinathan, Chief Executive Officer and Managing Director, said, "We ended the quarter with steady growth despite increased volatility in the financial services and retail verticals. We remain confident as the medium and longer-term demand for our services continues to be very strong, as evidenced by our Q2 order book - the highest in the last six quarters."

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Here are the financial highlights for Quarter Ended September 30, 2019:

• Revenue at Rs 38,977 crore, +5.8% YoY
• Constant Currency Revenue growth: +8.4% YoY
• Net Income at Rs 8,042 crore, +1.8% YoY
• Operating Margin at 24%; Net Margin at 20.6%
• Earnings Per Share at Rs 21.43, +3.8% YoY
• Net Cash from Operations at Rs 8,686 crore i.e. 108% of Net Income
• Total Dividend per share of Rs 45 per share including Rs 40 as a special dividend