Buy Tata Consultancy Services: Sharekhan

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Buy Tata Consultancy Services: Sharekhan

Buy Tata Consultancy Services, says Sharekhan's research report.

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Sharekhan has recommended a buy rating on Tata Consultancy Services (TCS) in its report dated October 16, 2009. The share ended at Rs 633.45, up Rs 12.05, or 1.94%

"Tata Consultancy Services (TCS) has reported stellar performance yet again in Q2FY2010. Despite higher foreign exchange (forex) losses, TCS Q2FY2010 results were ahead of our and street's expectations led by strong operating performance. The consolidated revenues grew by 3.2% sequentially to Rs7,435 crore. In the dollar terms, the revenues grew by 3.9% sequentially to US$1,538 million during the quarter driven by volume growth (4.97%; ahead of our expectation) and cross-currency benefits (0.72%). The unrecognised forex losses sitting on the balance sheet declined further to Rs 314 crore in Q2FY2010 from Rs 430 crore reported in the last quarter. At the current market price, the stock is trading at 19.8x FY2010 earning estimates and 17.8x FY2011 earnings estimates. We will review our earnings estimates and price target in a detailed note. We maintain our 'Buy' recommendation on the stock, "says Sharekhan's research report.

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