Tata Consultancy Services an outperformer: Karvy

Karvy Stock Broking has maintained its outperformer rating on Tata Consultancy Services with a target price of 1120 in its May 14, 2008 research report. "TCS which has been experiencing slower rate of revenue growth for the past 2 quarters, reported a weak revenue growth of just 2.9% sequentially in Q4FY08, which is on account of two large clients (in the BFSI vertical) didn’t ramped up to the desired level. Besides BFSI – which accounts for 43.8% of Q4 revenues grew by just 2.4%."

"We believe the stock at the current levels can give returns of 20% over the next 1 years. The management has indicated a decent demand environment and continuance of revenue growth momentum for FY09. With the company entering into newer higher growth verticals – there would be de-risking of revenues by verticals which augurs well. Besides the company is looking for acquisitions in Europe to ensure that revenues from Europe is significantly and it would act as a natural hedge against the US Dollar depreciation. We maintain with our Out performer rating," says Karvy's research report.

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