Tata Consultancy Services Op performance fails to enthuse, retain HOLD :Emkay,

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Tata Consultancy Services

Op performance fails to enthuse, retain HOLD

HOLD

CMP: Rs 1,120                                       Target Price: Rs 1,060

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n     Sep’11 results marginally below estimates with rev at US$ 2.5 bn (+4.7% QoQ), OPM’s improving by ~100 bps (V/s est +130 bps). Pfts in line aided by lower than est hedging gains

n      Seq vol growth strong at ~6.3%. Co wide rev growth impacted by ~7% decline in domestic business. Pricing declined 2nd quarter in a row  despite mgmt expectations of stable/improving pricing

n     Op metrics performance mixed. Broad based rev growth across geographies (ex India), verticals (ex Telecom). Top clients grow lower than co avg for the 3rd quarter in a row

n     Lower currency resets drive a 4/9% raise in FY12/13E EPS to Rs 54.5/62.6. Retain HOLD,TP Rs 1060. See stock trading weak given heightened expectations in run up to results