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TCS is set to announce its 2QFY2011 results. We expect the company to post revenue of
US $1,927mn with 7.4% qoq growth on the back of volume growth of 8.1%, crosscurrency
benefit of 0.55% and higher offshore effort. EBITDA margins are expected to be
flat at 29.3% as promotion cycles will take away the gains due to absorption of wage hike
in 1QFY2011, favourable currency and higher offshore effort. PAT is expected to be at
`1,990cr, with 7.9% qoq growth, on the back of strong revenue growth, maintained
profitability and lower forex losses. TCS remains to be our preferred pick amongst Tier-I IT
companies due to its strong capabilities in the financial services verticals with a broad
service portfolio and diversified geographical presence. At the CMP of `964, the stock is
trading at 20.5x FY2012E EPS of `47 with 7% upside to our Target Price of `1,032.
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