Barclays maintains 'Equal Weight' rating on TCS

Barclays has come out with research update on India's Technology major Tata Consultancy Services Limited after the analyst briefing held recently.

TCS indicated a slowdown in volume growth in the September quarter compared to the previous quarter (+5.3% q/q). However, the pipeline remains healthy and there have been no changes in customer decision-making trends.

In addition, margins could be flat q/q (27.5% EBIT) despite the sustained rupee weakness due to 1) manpower build and fresher joining; 2) growth in business areas/projects (APAC, India) with relatively lower margins and 3) cost impact due to onsite ramp up. While this performance would not necessarily lag peers significantly for the quarter, current valuations set a high hurdle rate for TCS. Barclays maintains its Equal Weight rating on the company.

Source : Equity Bulls

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