Technology was expected to be the big disappointment this quarter and TCS came in as a bit of a shocker this quarter. The stock has been punished, and is still down about 9% and has taken the entire IT index down with it; the CNX IT index is down almost 5%.

Bhavin Shah of JP Morgan says the Q4 results were below expectations and they have cut their 2009 and 2010 estimates.

He feels that most IT companies have already sounded about cautious about their June quarter. He further adds that larger companies like Infosys, TCS are still in a better shape even during the current US financial crisis.

Excerpts from CNBC-TV18's exclusive interview with Bhavin Shah: 

Q: What have you made of TCS’ numbers and whether you are scaling back revisions or guidances for the full year now?

A: The Q4 results were below expectations and suddenly we had to cut our 2009 and 2010 estimates by just over 3%. I think the financial segment is having an impact little bit more on TCS rather than other companies.

Q: Do you think it is going to be a quarterly blip though or would you be concerned about the performance for TCS for the full year now and what did you make of the fact that they seemed a lot more reticent about pricing and how that was shaping up?

A: I am not sure if I want to separate out TCS in the sense that TCS is going to have a significantly different performance from rest of the IT sector. In fact I think most companies have talked about cautious outlook for June quarter and TCS has talked about pretty strong order pipeline. So I do not think there is any specific issue here with TCS. It is clearly much more of a issue that industry is facing that we have previously talked about.

Q: If you take the entire IT sector performance which one do you think weathered the storm better or looks likely to weather the storm better?

A: Clearly we believe that companies with big franchises and experience to deal with a pace of slowdown will be better off. So the larger companies like Infosys, TCS are still in a better shape. We still think that Satyam is going to grow at a faster pace than these two companies so is Cognizant-US listed.

I think in a difficult environment though midcap companies stand to face more difficult challenges as the customers try to consolidate a bit unless they have a specific niche whether it is a geographical focus that is different or whether it is a product or service focus that is different. But otherwise I think the main big cap names like Infosys, TCS have dealt with this sort of slowdown before so I expect them to handle it pretty well.

Q: What about Satyam, were you okay with 17%-18% EPS guidance and what sort of earnings and price target do you have on that now?

A: We were surprised on the downside by the EPS growth guidance and I think the company is suddenly looking at some pressures on margins and perhaps being a little bit conservative as well. But I think as we had expected that their revenue growth- they are certainly enjoying a faster growth momentum compared with Infosys and TCS.

Q: There are some in the market who believe that Infosys in particular has expected that its last nine months will be better only the first quarter could be a blip do you buy their guidance, do you think it would be a little more challenging this time?

A: I think it is more uncertain this time that is a better way to put it. I am not sure if we have seen the worst of the financial sector crisis, I should not say the worse but we have seen the end of it. So the slowdown could prolong beyond June quarter I think that is certainly a possibility for that and that is why I would not buy into this idea that everybody knows that the first quarter is weak but then it is going to be fine after that. I do not think it is clear yet.

Q: Give us one word on the valuation gap that used to exist between Infosys and TCS, is that a case now for a larger cushion between Infosys and TCS?

A: Not really, I think TCS has delivered a really strong performance over last three years, so the quality of their business is very strong. The customer feedback about TCS has always been very consistent and positive so we do not see any reason for a material valuation gap.