IT Services Sector -Cutting estimates to factor in worsening macro n Emkay

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IT Services Sector

Cutting estimates to factor in worsening macro

n     We cut our Tier 1 IT Target prices by ~23-29% driven by ~9-11% cuts in FY13E earnings as we lower our FY13 US$ revenue growth estimates to 11-16% ( V/s 18-20% earlier)

n     Expect in line Sep’11 and Dec’11 quarter results. Risks to pricing discipline giving way remain higher given players geared for growth

n     Infosys remains the lone ACCUMULATE rated stock as we see company holding out better in a worsening macro. See stock bottoming out at Rs 1800-2,000 levels

n     We cut rating on TCS to HOLD ( V/s ACCUMULATE earlier) as we see risk to heightened expectations ( given superlative performance over the past few quarters)