The management has indicated continuing challenges on the macro front. Budget finalizations getting further delayed; becoming immaterial, in any case.
Consequently, velocity of business flow continues to be slow. Clients looking at reduction in opex spend - leading to more off-shore initiatives but also pricing variations, we believe. No major client specific issues in the current quarter.
We tweak FY09 and FY10 earnings estimates marginally lower - assume further impact on volumes and change our exchange rate assumptions.
DCF-based price target has also been revised to Rs1,430 (Rs1,465 earlier). We continue to repose faith in management team and the strong business model and maintain BUY recommendation on the stock.
A sharp appreciation in the rupee against various currencies and a prolonged recession in major user economies remain the key risks to our call.