Indian IT services companies got the booster from the extension of STPI benefits by another year (as had been speculated per media reports in the run up to the budget). The extension of tax benefits under Section 10A/10B of the Income Tax Act'1961 would lead to EPS upgrades for FY11 by ~0%-17% (refer table below) with HCL Tech/Tech M being the biggest beneficiaries amongst our large cap IT services universe and mid cap IT services universe. Further clarity on SEX tax benefits under Section 10 AA has merged, however this would be relevant only in FY11 and beyond.
We remain Neutral on the sector with our positive bias only towards Mphasis and Tech M in our coverage universe.
Ratings
| Company Name | Rating | CMP | Target Price |
| Infosys | HOLD | 1739 | 1640 |
| TCS | HOLD | 389 | 295 |
| Wipro | REDUCE | 376 | 240 |
| HCL Tech | HOLD | 184 | 124 |
| Tech M | ACCUM | 706 | 550 |
| Mphasis | BUY | 367 | 310 |
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