IT Services July 09 Sector Preview ; US$ reported revenues to be aided by ~170-230 bps for Wipro, TCS and Infy. Expect Infy, Wipro to beat upper end of quarterly revenue guidance while TCS will report the least QoQ decline

IT Services

 

Too early an optimism?

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US$ reported revenues to be aided by ~170-230 bps for Wipro, TCS and Infy. Expect Infy, Wipro to beat upper end of quarterly revenue guidance while TCS will report the least QoQ decline

Tech M could report highest sequential revenue growth in US$ terms aided by GBP, Euro strength against US$.

Expect an upgrade in US$ revenue guidance for Infy aided only by cross currency benefits to US$ 4,475 mn-4,615 mn and would be surprised by any volume led increase in guidance. Upper end of INR EPS guidance to be lowered to ~Rs 98 from Rs 101.2

Commentary could be mildly positive across vendors as pace of project ramp downs decelerated during June'09. However any absolute upsides from current levels warrant meaningful EPS upgrades in our view.

Ratings

Company Name	Rating	CMP	Target Price
Infosys	HOLD	1797	1640
TCS	HOLD	387	265
Wipro	REDUCE	378	240
HCL Tech	HOLD	190	124
Tech M	ACCUM	747	550
Mphasis	BUY	369	310
Patni	NR	265	n.a