TCS: Barclays Capital maintain 'Equal Weight' rating

MUMBAI: Barclays Capital is of the view that Tata Consultancy Services lagged Infosys Technologies in US$ revenue growth for second quarter. It has maintained ‘ Equal Weight’ rating on the stock but prefers Infosys Technologies amongst the two.

“TCS revenue growth (4.5% q/q cc) was similar to Infosys and margins expanded helped by currency. Management commentary gave ample hints about demand uncertainty, which we believe should result in a tepid growth for Mar-12 quarter. But, positive commentary on pricing and lack of any contract cancellations buttress our view of a slowdown but not a sharp deterioration, supporting our constructive call on the sector.

Between Infosys and TCS, we build similar medium term growth and hence continue to prefer Infosys due to cheaper valuation.

Dec-11 is the second quarter when TCS has lagged Infosys in US$ revenue growth and with that in context its valuation premium is unjustified. Maintain 2-EW with PT of Rs1,230.

Infosys remains the top sector pick,” the report said.