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Buy TCS, target of Rs 584: Motilal Oswal
Motilal Oswal has maintained its buy rating on Tata Consultancy Services (TCS) with a target of Rs 584. 3QFY09 USD revenues declined 5.8% QoQ to USD 1,483 million. PAT at Rs 13.5 billion grew 7.2% QoQ.
Motilal Oswal has maintained its buy rating on Tata Consultancy Services (TCS) with a target of Rs 584 in its January 15, 2009 research report. "3QFY09 USD revenues declined 5.8% QoQ to USD 1,483 million. PAT at Rs 13.5 billion grew 7.2% QoQ. In 3Q, both TCS and Infosys have grown 1% QoQ (in constant currency). Although TCS' realization has been flat QoQ, we believe accommodative billing rates are close to reality and pricing will be key going forward."
"We have marginally reduced our FY10 EPS to Rs 56.2 (from Rs 57 earlier), while keeping our FY09 assumptions largely unchanged, in order to factor in likely strained margins resulting from rising pricing concerns. We expect FY10 USD consolidated revenue to grow at 7.4% for TCS (4% excl. CGSL). The stock is trading at 9.1x FY10E earnings. We value TCS at 10.4x FY10 EPS (a 20% discount to the P/E multiple implied by Infosys' target price). Maintain Buy with a target price of Rs 584," says Motilal Oswal's research report.
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