Delivers miles ahead of expectations with revenues of ~US$ 1,481 mn (+3.3% qoq) along with eye popping 100 bps qoq margin expansion. Sequential revenue growth performance worth appreciating in the backdrop of ~270 bps increase in offshore % of revenues to 50.4%.
Operating metrics performance leaves little to complain with revenues from Financial Services/US up ~6%/3% qoq.
Increase FY10/11 EPS estimates by ~15%/19% to Rs 30.2 and Rs 33.1 driven by margin resilience and lower forex losses with help from US$/INR appreciation (note that during FY09, EPS was impacted by ~Rs 4 on a/c of forex losses alone)
Upgrade TCS to ACCUMULATE from HOLD with a revised March’11 target price of Rs 490 at 5% discount PER multiple to our implied FY11 P/E multiple for Infosys.
Expect TCS’s recent streak of outperformance combined with narrowing of valuation discount vis-à-vis Infosys to continue
