Being big time exporters helps IT cos get benefits from rupee depreciation

 However, Indian IT cos are facing demand slowdown due to high exposure to banking & financial services industry (BFSI), which has been hard hit by global financial crisis. Now, with small improvement in the BFSI segment in the US, Indian cos are expected to do better as they still get a major chunk of biz from there. SundayET takes a peek into the recommendations of top brokerage houses

LARGE CAP
Angel Broking & Motilal Oswal Financial Services
INFOSYS TECHNOLOGIES CMP: Rs 1,296
Infosys has a highly resilient business. It has a strong focus on profitability, borne out by the fact that for quarter ended December '08, EBITDA margins crossed 35%. In light of the recent Satyam fiasco, the focus on corporate governance has increased and cos like Infosys are likely to command valuation premiums over other IT stocks.
TCS CMP: Rs 506
In the aftermath of the credit crisis, TCS is focusing on risk mitigation strategies such as additional due diligence on deal profitability. The management has mentioned that margin pressures would be countered through lower SGA expenditure, increased off shoring, larger contribution from fixed price projects, and better utilisation.
MID CAP
SMC Global and Prabhudas Lilladher
MPHASIS CMP: Rs 188
Mphasis reported 9% growth in consolidated operating revenues at Rs 977.66 cr on the back of 4% volume growth, 3-3.5% on rupee depreciation and balance on realisation improvement for the quarter ended Jan '09. Mphasis would benefit from its strong parentage and its presence in service lines such as BPO & infrastructure.
ROLTA INDIA CMP: Rs 43
The order book of Rolta India stands at a healthy level of Rs 1,590 crore, which is to be executed over the next 1.5 years. Moreover, with almost 55% of revenues coming from the Indian market, we believe Rolta India is better placed in terms of downside protection to its revenues as compared to other mid-cap IT companies.
SMALL CAP
SMC Global
GEODESIC CMP: Rs 51
The company is an innovator in software products focused on information, communication and entertainment for mobile phones and desktops. In January 2008, the company raised $125 million, by issuing FCCBs, to fund future acquisitions. Geodesic appears set to exploit instant messaging mkt, targeting to reach $530mn by 2011.
ICSA CMP: Rs 51
ICSA develops tech solutions for the power sector to identify transmission & distribution (T&D) losses and to monitor power consumption using GSM network. For quarter ended December '08, it reported a 60% rise in revenues. ICSA can be a direct beneficiary of this expansion, as all the power utility cos want to minimise T&D losses.