10 July 2011

Software 􀂉 1QFY12 earnings preview -- CLSA

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Software
􀂉 While demand environment for Indian Techs remains good, FY12 consensus
$-revenue estimates of 23-27%YY growth for Tier-1 stocks already builds in
this optimism.
􀂉 Within the sector, TCS’ prospects remain the most solid (strong growth, good
margins and stable management) but the stock needs to contend with high
expectations and over-ownership.
􀂉 After the recent up-move, Infosys stock’s prospects hinge on revenue upsides
and we do not expect the June quarter to provide upward proof points on this.
􀂉 While HCL’s revenue growth is not in doubt, sustainable stock upsides depend
on its ability to maintain margins while showing growth and we would wait for
1HFY12 financials before taking a constructive view.

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