For 1QFY2018, TCS posted below expectation results on the EBIT and net profit fronts. The company posted 3.1% sequential growth in USD revenues to US$4,591mn v/s. US$4,585mn expected, mostly volume lead (3.5% qoq growth). On Constant Currency terms, the company posted a 2.0% qoq growth. On profitability, the EBIT margins came in at 23.4% v/s. 24.2% expected, posting a qoq dip of 236bps. Impact of wage hikes and visa expenses, apart from rupee appreciation were the major drags on profitability. Consequently, PAT came in at `5,945cr v/s. `6,275cr expected, de-growth of 10.0% qoq. We maintain our Accumulate rating with a target price of `2,651.

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