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Hold TCS, target of Rs 561: Reliance Money
Reliance Money has maintained its hold rating on Tata Consultancy Services (TCS) with a target price of Rs 561. After putting a unexciting performance in Q1FY09, TCS’s performance for Q2FY09 does brings some respite with a 6% blended volume growth and stable pricing (up by 0.30% qoq).
Reliance Money has maintained its hold rating on Tata Consultancy Services (TCS) with a target price of Rs 561 in its October 25, 2008 research report. "After putting a unexciting performance in Q1FY09, TCS's performance for Q2FY09 does brings some respite with a 6% blended volume growth and stable pricing (up by 0.30% qoq). Consolidated revenues in USD term was up by 3.2% to USD 1574 million, in the INR term aided by better rupee reliasation up by 8.5% to Rs 69534 million."
"Though valuations are seems to be attractive at the current level at 9x FY09E and 8X FY10E, however we believe there could be further weakness in the stock performance in the medium term owing to subdued market condition and loss of invertors confidence in the Indian IT sector, which is quite reflected in multi years low trading PE multiple. To factor the weak industry headwinds and subdued market , we have revised our one year target PE multiple for TCS from 16X to 10X, thus we have revised our target price to Rs 561 . We maintained HOLD on TCS with a 12M target price of Rs 561, at our target price stock will be valued at 10X FY09 and 8X FY10," says Reliance Money's research report.
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