IT Services - Realigning EPS est to revised currency assumptions - Emkay

- We raise our FY14 EPS est by 1-5% for Tier I IT Coverage universe driven by reset in currency assumptions (Rs 55/$ for FY14). Tier II companies see a 0-4% change in EPS estimates

- We do not see complete flow through of currency gains into margins/earnings as we see co's reinvesting these gains back in business akin to what we have seen through FY11-13

- Our 'selectively positive' thesis on the sector stays. Prefer Infosys (BUY, TP Rs 2,900) and HCL Tech (ACCUMULATE, TP Rs 870) in the Tier I space. Retain HOLD on TCS, TP Rs 1,450

- We also upgrade Wipro to HOLD (V/s REDUCE earlier), TP Rs 360 given inexpensive valuations at <13x/12x FY14/15E with little downside risks to estimates ahead

Source : Equity Bulls

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