TCS an underperformer, target price of Rs 1135: CLSA

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TCS an underperformer, target price of Rs 1135: CLSA

CLSA has maintained underperformer ratring on TCS with price target of Rs 1135 with 12 month prespective.

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CLSA has maintained underperformer rating on TCS with a 12- month target price of Rs 1135 in report dated on November 6th, 2007. "TCS expects a Dec quarter "similar to Sep", which in our interpretation impliesthat seasonal weakness is unlikely to hit TCS as hard as peers. TCS hastraditionally out-shone peers in Dec, and we expect the same this year as well.EBIT margins for FY08 could stay within 50bps of last year's average (24.9%), butthis includes continued cash flow hedging gains. TCS had Rs 3.32 billion in un-bookedcash flow hedge gains on the OCI account as of last quarter - this is 80bps ofnext six quarter revenues, and 125bps of next four quarter revenues. TCS (andWipro's) reported EBIT margins are thus not comparable with Infosys/Satyam. "according to the CLSA research report.

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