投资者-核心主题及我们的偏好排序-Investor Presentation Key Themes and Our Order of Preference

Summary of Key Points from the Conference Call Industry Overview - Industry: Indian IT Services - Current View: In-Line with potential for moderation in growth rates during the technology transition phase [12][10] Core Insights - IT Services Spending: The multiplier effect of IT services spending on US nominal GDP growth is expected to remain low during the transition phase of the new technology cycle [12][10] - Valuation Multiples: Indian IT companies' valuation multiples are relatively comforting compared to the Sensex over the past five years, but they do not appear cheap compared to global peers [1][10] - Company Preferences: - Large Caps: - Overweight (OW): TCS - Underweight (UW): Wipro, Tech Mahindra - Mid Caps: - Overweight (OW): MphasiS, Coforge - Equal Weight (EW): LTTS - Underweight (UW): Cyient, Tata Elxsi [1][7] Financial Projections - TCS: Projected EPS for FY28 is 161 with a current market price (CMP) of 630, indicating a potential upside of 34.6% [8][7] - MphasiS: Projected EPS for FY28 is 124 with a CMP of 260, indicating a potential upside of 50.9% [8][7] - Coforge: Projected EPS for FY28 is 62 with a CMP of 214, indicating a potential upside of 67.3% [8][7] Growth Trends - Historical Performance: The top four Indian IT companies' revenue growth is lagging behind overall IT/ITES exports, suggesting stronger growth momentum in Global Capability Centres (GCC) compared to third-party service companies [17][18] - Past Technology Cycles: Previous technology transitions saw initial growth moderation followed by acceleration, with a temporary decline during COVID-19 [14][12] Market Sentiment - Investor Positioning: There was a relatively bullish sentiment among investors at the end of December 2025, although this may have shifted in the current quarter [29][10] - Analyst Consensus: Morgan Stanley's growth rate estimates for large caps are generally lower than consensus, indicating a cautious outlook [27][28] Key Concerns - Macro Environment: The macroeconomic slowdown in the US is expected to impact growth rates for Indian IT exports, with a prolonged slowdown anticipated [12][10] - Return on Invested Capital (ROIC): Indian IT services have maintained stable ROIC over the past decade, translating into strong total shareholder returns, but the initial years of the last technology cycle saw a decline in ROIC [23][24][25] Conclusion - The Indian IT services sector is currently navigating a transition phase with potential growth moderation. While certain companies are favored for investment, the overall market sentiment remains cautious amid macroeconomic challenges and changing technology cycles.