IIFL has recommended an add rating Tata Consultancy Services (TCS) in its report dated October 20, 2009.
"TCS beat our expectation with 4% QoQ USD revenue growth in 2QFY10-a number we believe will be the best in this quarter among the top-3 vendors. Volumes grew 5% QoQ and EBITDA margin expanded by 150bps, despite a hike in variable salary payout (payout of 150%). The company's products business is recovering strongly after a bad year-revenues are up 60% since 4QFY09. Stronger signs of growth are also evident in its key vertical, BFSI (45% of revenues), as technology integration deals ramp up. The appreciating rupee is a risk and pressures in the telecom, manufacturing and high-tech domains make a stronger recovery unlikely. However, given stronger volume growth and margin expansion, we upgrade our FY10 and FY11 EPS estimates by 8% and reiterate our recommendation to switch from Infosys to TCS and Wipro," says IIFL's report.
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