Analyst's Pick: Tata Consultancy Services

CMP: Rs 480.80

Target price: NA

JP Morgan has maintained its ���overweight��� rating on TCS against the backdrop of several cost-cutting measures adopted by the IT company. The broking outfit expects resiliency in TCS��� operating margins during the next fiscal, but has also cautioned of near-term weakness in earnings growth. ���TCS is looking to reduce variable portion of employee salaries, has increased working hours of employees as per news reports. These cost-cutting measures are largely in line with our expectations; top Indian IT companies would be able to defend margins next fiscal despite pricing pressure,��� the JP Morgan report said. According to the broking house, revenue growth remains the key variable of debate. ���We continue to believe that top-tier players can deliver flat revenues in the next fiscal due to market share gains and Satyam issue. Given low investor expectations, a flat revenue would be enough to drive share price,��� the report added.