In US Dollar terms, TCS recorded topline growth of 3.3% q-o-q aided by cross-currency fluctuations witnessed over the quarter, with the Euro, British Pound and Australian Dollar all appreciating against the US Dollar, boosting reported Dollar revenues.

However, this was neutralised on account of the Rupee appreciation witnessed over the quarter, with the realised Rupee rate being lower by 2.7% qoq (Rs48.70 per Dollar v/s Rs50.05 in 4QFY2009).

This had an adverse impact of 0.24% on topline growth. Thus, TCS recorded a mere 0.5% qoq growth in Top-line in 1QFY2010 in Rupee terms.

The company recorded fairly decent volume growth of over 3.5% qoq during the quarter, which exceeded our expectations. This is a considerably better performance as compared with Infosys, which recorded a volume decline.

TCS has stated that there were no major negative surprises from its key clients, which led to the better-than-expected performance. Nonetheless, pricing again registered a decline of 0.25% q-o-q.

A 270bp q-o-q offshore shift also had an adverse impact of 2.56% on the company’s Top-line growth. On a y-o-y basis, Dollar Revenues fell by 3%, while Rupee Revenues grew by 12.4% y-o-y owing to the significantly higher Rupee rate (up 15.8% yoy, Rs42.04 in 1QFY2009).

The business environment remains uncertain, with the Manufacturing, Telecom and Hi-tech verticals reeling under pressure. Pricing pressure is expected to sustain in FY2010 as well. Hence, the company has maintained its cautious stance.