India IT Services Sector

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1 Asia Pacific/India Equity Research Computer Services & IT Consulting Research Analysts Anantha Narayan Nitin Jain India IT Services Sector COMMENT Dec-16: Seasonally soft quarter; near-term outlook may remain hazy Figure 1: Dec-16 results expectations Company Result Rev growth EBIT bp bp EPS % QoQ % YoY date* $, QoQ cc, QOQ margin QoQ YoY (Rs) TCS 12-Jan 0.2% 1.5% 26.3% % 5.5% Infosys 13-Jan -0.9% 0.0% 24.6% % 1.5% Wipro 25-Jan NA NA 16.9% % -2.4% Wipro ITS 0.4%* 1.3%* 18.0% NA NA NA HCL Tech Jan (4th week) 2.0%^ 3.0%^ 19.8% % 10.0% Tech M 30-Jan 1.5%^^ 2.7%^^ 13.0% % 6.8% Mindtree 19-Jan 0.1% 0.5% 10.2% % -28.5% Hexaware Early Feb 1.1% 0.5% 15.3% % 10.7% NIIT Tech 17/18 Jan -0.8% 0.3%# 11.9% % -19.3% Source: Company data, Credit Suisse estimates. Inorganic contribution: * 80 bp ^ 60 bp ^^ 60 bp # before hedging gains/losses Seasonally soft quarter in an uncertain environment. In a seasonally soft quarter (lesser number of working days), surrounded by macro uncertainty, we expect the larger Indian IT firms to report flat to 2.4% QoQ revenue growth in constant currency and organic terms, with Infosys at the lower end (RBS contract termination) and HCLT/TechM at the upper-end. Margin performance should be mixed. With USD appreciation against all the major currencies, we expect bp cross-currency headwind for the larger firms. Currency may be net negative as INR depreciation of close to 0.7% may not offset the cross-currency impact fully. We do not expect any change in guidance from Infosys and HCL Tech (although the revenue growth range for the latter may be narrowed). There could be potential tailwinds, but the visibility on these remain low. The eventual roll-out of deferred projects, any pick-up in the US economy and higher interest rates (that correlates to revenue growth from financial services customers) can potentially accelerate revenue growth for the sector and expand P/E multiples as well. However, based on our discussions, there do not appear to be any signs of a near-term pick-up in discretionary spending. Additionally, President-elect Trump's antiimmigration rhetoric poses some uncertainty for the sector. HCLT and TechM remain our top picks. In this context, our stock picks are selective. Despite relative outperformance over the past three months, we believe HCLT and TechM are better positioned with low downside risk valuations are attractive, business momentum seems fine, and the immigration impact (if any) will be relatively low. Any acceleration in revenue growth should benefit them equally. We have slightly tweaked our earnings estimates to account for currency movements and minor changes in our revenue estimates. DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

2 Focus tables Figure 2: Global valuation comps Company Local Mcap 3M ADTV Sales US-listed (CY15) EV/EBITDA EBITDA CAGR P/E (x) EPS CAGR Share price perf Price US$ mn US$ mn US$ mn CY16E CY17E CY15-17 CY16E CY17E CY M 3M 12M Accenture , , % % 0% -1% 12% Cognizant 56 33, , % % 4% 12% -7% CSC* 59 8, , % % 0% 15% 82% EXLS* 50 1, % % 6% 2% 12% Genpact* 24 4, , % % 2% 3% -3% Infosys (ADR) 15 33, , % % 4% -7% -11% Syntel* 20 1, % % 0% -24% -33% Wipro (ADR) 10 23, , % % 4% 0% -16% WNS* 28 1, % % 9% -5% -12% Europe-listed Atos , , % % 6% 2% 29% Capgemini 80 14, , % % 10% -10% -6% Indra 10 1, , % % 7% -14% 20% TietoEnator 26 2, , % % 9% -7% 5% India-listed Cyient* % % 2% 4% 3% eclerx* 1, % % -7% -6% -2% Firstsource Solutions* % % 4% -8% -13% HCL Tech , , % % 4% 1% -2% Hexaware % % 2% 8% -15% Infosys (local) 1,011 33, , % % 5% -4% -8% KPIT* % % 1% 3% -20% L&T Infotech* 680 1, % % 5% 10% NA L&T Tech. Services* 825 1,210 NA 457 NA NA NA NA NA NA -7% -5% NA Mindtree 522 1, % % 13% 5% -28% MphasiS* 566 1, % % 8% 4% 14% NIIT Technologies % % 0% 0% -26% OFSS* 3,119 3, % % 4% -6% -18% Persistent* % % 3% -7% -5% Polaris* % % -4% -7% -29% TCS 2,362 68, , % % 6% -2% -2% TechM 489 6, , % % 3% 14% -5% Wipro (local) , , % % 3% -2% -15% Zensar* % % -5% -5% -13% Sensex 1% -6% 1% BSEIT 5% -1% -8% Estimates for companies marked with an asterisk (*) are consensus estimates provided by IBES. Adjusted for treasury shares. Source: Company data, Thomson Reuters Price Price Rating* Target Price Year EPS EPS FY1E EPS FY2E EPS FY3E Company Ccy 30 Dec 16 Prev Cur Prev Cur End Ccy Prev Cur Prev Cur Prev Cur HCL Technologies (HCLT.BO) Rs O Mar-16 US$ Hexaware Technologies Rs N Dec-15 Rs (HEXT.BO) Infosys Limited (INFY.BO) Rs N Mar-16 Rs Mindtree Ltd (MINT.BO) Rs U Mar-16 Rs NIIT Technologies (NITT.NS) Rs O Mar-16 Rs Tata Consultancy Services Rs N Mar-16 Rs (TCS.BO) Tech Mahindra Limited Rs O Mar-16 Rs (TEML.BO) Wipro Ltd. (WIPR.BO) Rs N Mar-16 Rs *O - Outperform, N - Neutral, U - Underperform, R - Restricted [V]= Stock consider volatile ( see Disclosure Appendix). Company data, Credit Suisse estimates India IT Services Sector 2

3 Dec-16: Seasonally soft quarter; near-term outlook may remain hazy Figure 3: Dec-16 earnings expectations Company Result date* Revenue (Rs bn) Rev growth ($, % QoQ) Rev growth ($, growth (cc, % YoY) Rev % QoQ) EBIT margin bp QoQ bp YoY EPS (Rs) % QoQ % YoY TCS 12-Jan % 5.7% 1.5% 26.3% % 5.5% Infosys 13-Jan % 6.5% 0.0% 24.6% % 1.5% Wipro 25-Jan 136 NA NA NA 16.9% % -2.4% Wipro ITS %* 4.6%* 1.3%* 18.0% NA NA NA HCL Tech Jan 4 th wk %^ 12.2%^ 3.0%^ 19.8% % 10.0% Tech M 30-Jan %^^ 7.3%^^ 2.7%^^ 13.0% % 6.8% Mindtree 19-Jan % 4.9% # 0.5% 10.2% % -28.5% Hexaware Early Feb 9 1.1% 10.1% 1.5% 15.3% % 10.7% NIIT Tech 17/18 Jan 7-0.8% -0.9% 0.3% % % -19.3% Source: Company data, Credit Suisse estimates. * Inorganic contribution of 80 bp QoQ and 540 bp YoY ^ Inorganic contribution of 60 bp QoQ and 370 bp YoY ^^ Inorganic contribution of 60 bp QoQ and 400 bp YoY # 400 bp inorganic YoY contribution + Before hedging gains/losses TCS TCS had a soft start to the year with 3.1% and 1% cc, QoQ growth in 1Q and 2Q, respectively, and these are usually seasonally stronger quarters. While the headwinds of FY16 (including softness in its Diligenta subsidiary and Japan operations and overall weakness in the energy vertical) have moderated, TCS is now witnessing some headwinds in its BFSI vertical with the recent slowdown in discretionary spending by some of its large US banking clients leading to some project deferrals. It has also seen some slowdown in retail (declined 3% QoQ in Sep-16) this has been more pronounced in the UK than in the US. Although management has sounded quite positive on medium-term growth prospects and expects deferred revenue to get 'bunched-up' in the coming quarters, we believe the visibility remains low at the moment. Also, the margins may settle at close to the lower end of management's guided range of 26-28%. With low expectations, even a small acceleration in growth could be a decent stock trigger; however, the visibility of this happening is low currently and we would prefer to remain on the sidelines for now. Management previously indicated that the sequential growth in 2H FY17 may be better than the corresponding growth last year, accounting for deferred revenue of about US$25 mn in the India business and soft sequential growth in 3Q and 4Q last year. We expect the company to report 1.5% QoQ growth (cc) in 3QF Y17. With 130 bp cross currency impact, we expect the USD revenue to be flat QoQ. We have not assumed any lumpy revenue in the India business in 3Q, however. The currency will have a negative impact on the margins, net of the INR depreciation against the USD. On the other hand, the absence of US$26 mn relating to the Orange County lawsuit settlement should support margins by 60 bp. Overall, we expect 30 bp QoQ EBIT margin expansion in 3Q. Key things to watch: (1) With TCS a bellwether of Indian IT and the first large company in the sector to report, management's qualitative comments on the overall demand environment, particularly the US elections impact, will be important. (2) Update on the BFSI and retail verticals. (3) TCS's comfort with its previously cited 26-28% EBIT margin range. Date of results announcement: 12 January India IT Services Sector 3

4 Figure 4: Dec-16 earnings estimates Rs mn Dec-15 Sep-16 Dec-16 % QoQ % YoY Revenue ($ mn) 4,145 4,374 4, % 6% Revenue 273, , , % 8% EBIT 72,762 76,170 77,652 2% 7% EBIT margin 26.6% 26.0% 26.3% 30 bps -30 bps Net income 61,095 65,860 64,498-2% 6% EPS (Rs) % 6% Source: Company data, Credit Suisse estimates Infosys Figure 5: Infosys Dec-16 earnings estimates Infosys had a strong 2Q, helped by the GST deal ramp-up; however, management has sounded cautious on the second half (the 8-9% cc revenue growth guidance for FY17 implies -0.6% to +0.6% CQGR for 3Q and 4Q). The RBS deal ramp-down should begin in 3Q (3,000 FTEs in total) and besides this, Infosys is also facing headwinds on some fronts including volatility in retail and manufacturing verticals, and restructuring of consulting and BPO practices. It has also indicated cautious client behaviour. Infosys has performed in line with TCS in the last three months, and currently trades at 10% discount to TCS. Given, the near-term lack of triggers, we do not expect any imminent re-rating in the stock. We expect Infosys to report flat sequential revenue in cc terms (-0.9% in USD terms, accounting for estimated 90 bp cross currency headwind). This includes about 100 bp of impact that we have assumed for the rampdown of the RBS contract. Margins may deteriorate slightly by 30 bp QoQ net negative currency impact and headwind from the RBS ramp down. We have not assumed any forex hedging/translation-related gains/losses. Key things to watch: (1) Any further change in FY17 guidance (we expect it to remain unchanged at 8-9% in constant currency and our current estimate of FY17 revenue growth is towards the upper end). (2) Any further update on the medium-term margin trajectory (consensus EBIT margin estimates for FY18/19 have come down towards the mid-range of the 24-26% guidance). (3) The deal win momentum management is targeting to achieve US$1 bn quarterly TCV (vs over US$1.2 bn in 1Q FY17 and average of over US$780 mn over the last four quarters). (4) Update on senior management resignations, the most recent being that of the Chief Compliance Officer. Date of results announcement: 13 January Rs mn Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 % QoQ % YoY Revenue ($ mn) 2,407 2,446 2,501 2,587 2, % 6% Revenue 159, , , , , % 9% EBIT 39,590 42,200 40,470 43,090 42,522-1% 7% EBIT margin 24.9% 25.5% 24.1% 24.9% 24.6% -30 bps -30 bps Net income 34,650 35,970 34,360 36,060 35,160-2% 1% EPS (Rs) % 1% Source: Company data, Credit Suisse estimates Wipro While Wipro has been more active in terms of acquisitions, some of which have been in attractive areas, they are yet to reflect in increased earnings momentum. The energy vertical remains a headwind and is yet to show signs of a pick-up. Relative India IT Services Sector 4

5 valuations are attractive and the first signs of a growth pick-up can be a powerful stock price trigger, but we find it difficult to get visibility on any near-term triggers. We expect Wipro to report 1.3% revenue growth in cc terms, close to the mid-point of its guided range of 0-2%. We have assumed one month revenue contribution of the Appirio acquisition (that was closed on 23 November, 2016), which should be about US$16 mn. On an organic basis, sequential revenue growth should be close to 0.4%. We estimate cross currency headwind of 90 bp. Absence of the wage increase headwind should help margins but this would be offset by the negative currency impact and some dilution from Appirio (mid-single digit EBIT margins vs high teens margins of Wipro). We expect only 20 bp QoQ EBIT margin expansion in the IT Services business. We have not modeled any forex hedging/translation gains/losses. Key things to watch: (1) 4Q FY17 guidance our expectation for organic revenue growth is %; and (2) overall management commentary on the recovery in the energy vertical and deal pipeline. As mentioned earlier, any significant re-rating of the stock is contingent upon acceleration in growth rates. Expected date of results announcement: 25 January. Figure 6: Wipro consolidated Dec-16 earnings estimates Rs mn Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 % QoQ % YoY Revenue 129, , , , , % 5% EBIT 23,874 24,836 22,847 22,971 23,000 0% -4% EBIT margin 18.4% 18.1% 16.7% 16.5% 16.9% 40 bps -150 bps Net income 22,341 22,350 20,518 20,672 21,439 4% -4% EPS % -2% Source: Company data, Credit Suisse estimates Figure 7: Wipro IT Services Dec-16 earnings estimates Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 % QoQ % YoY Revenue ($ mn) 1,838 1,882 1,931 1,916 1, % 5% Revenue 123, , , , ,995-1% 6% EBIT 24,821 25,660 23,273 23,372 23,347 0% -6% EBIT margin 20.2% 20.1% 17.8% 17.8% 18.0% 20 bps -220 bps Source: Company data, Credit Suisse estimates HCL Tech There is now greater clarity on growth (12-14% revenue growth guidance for FY17 in cc) and margins ( % EBIT margin guidance for FY17). Also, HCLT has the highest local employee mix in the US (well over 50%). The impact of cloud on the overall business is somewhat limited in the near term, in our view (contrary to the general perception of it being a significant headwind), and the recent softness in the engineering business should reverse in the medium term. Despite slight outperformance over peers, HCLT is trading at reasonable multiples (below 13x FY18 P/E), with decent revenue growth and sustainable margins likely in the medium term. We expect HCL Tech to report 2.8% QoQ growth in cc (1.8% in USD terms). We expect US$10-11 mn incremental contribution from the IP partnership with IBM (about 60 bp contribution) and have not modeled any contribution from the Geometric and Butler acquisitions (we have, however, factored in revenue from Geometric in 4Q). We expect the growth to be led by some recovery in engineering services business and continued momentum in the infra business. The BPO business should also witness some growth during the quarter. Margins may be negatively impacted due to the India IT Services Sector 5

6 Figure 8: HCL Tech Dec-16 earnings estimates staggered wage hike and the currency headwind. We expect 40 bp EBIT margin contraction. We have built in US$5 mn forex gains for the quarter. Key things to watch: (1) The momentum in the infrastructure management business. (2) Pick-up in growth in the engineering business that has started to show some momentum. (3) Any updates on the revenue and margin guidance (we do not expect any change although there is a possibility that the company may narrow the revenue guidance range as it would imply a wide range for 4Q). (4) Management's comments on the demand environment it has so far indicated no impact of the macro factors on the business. Expected date of results announcement: The fourth week of January. US$ mn Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 % QoQ % YoY Revenue 1,566 1,587 1,691 1,722 1, % 12% EBIT % 11% EBIT margin 20.0% 20.7% 20.6% 20.1% 19.8% -40 bps -30 bps Net income % 8% EPS (Rs) % 10% Source: Company data, Credit Suisse estimates Tech Mahindra The TechM stock has outperformed the BSE IT index in the last three months, on the back of stronger-than-expected 2Q results. Fundamentals have been improving at the margin for the company. The telecom vertical, that was weak in FY16, has been gaining some momentum. The enterprise vertical should maintain steady growth, led by the BFSI and manufacturing verticals. Margins are currently at depressed levels relative to its recent history and we believe TechM is probably the only large IT company where margins can expand over the next 2-3 years, with recovering revenue growth. This, together with attractive valuations (12x FY18 P/E), makes us like the stock. We expect a balanced growth between the telecom and enterprise business. With slight improvement in the Comviva revenue (~US$4-5 mn incremental revenue) and relatively stable LCC revenue, we expect the telecom business to grow at 2.5% in cc. Enterprise business should grow at 2% in cc on an organic basis. Incremental 1.5 month contribution from the Target Group should add about US$6 mn to the revenue during the quarter (60 bp). Overall, TechM may report about 2.1% cc organic revenue growth. Cross currency movements may negatively impact the revenue by 120 bp. The absence of restructuring cost of 120 bp incurred in 2Q FY17, together with margin benefits from a seasonally better quarter for Comviva and other operational efficiency measures may help margins. On the other hand, currency may have some negative impact on the margins. We have assumed forex gains of Rs500 mn during 3Q. We have assumed tax rates to come down QoQ from 31% to 24% 2Q tax rate had been higher on account of tax on dividend received from subsidiaries. Key things to watch: (1) Update on the margin trajectory in the medium term margins have been one of the major reasons for disappointment. (2) Outlook for the telecom business and update on the deal pipeline. (3) Cash flow metrics have traditionally been weak but there has been some improvement recently. (4) The attrition has been high for the company it would also be a key metric to look out for. Expected date of results announcement: 30 January. India IT Services Sector 6

7 Figure 9: TechM Dec-16 results expectations Rs mn Dec-15 Sep-16 Dec-16 % QoQ % YoY Revenue ($ mn) 1,015 1,072 1, % 7% Revenue 67,011 71,674 73, % 10% EBIT 9,622 8,254 9,588 16% 0% EBIT margin 14.4% 11.5% 13.0% 150 bps -140 bps Net income 7,592 6,447 8,175 27% 8% EPS (Rs) % 7% Source: Company data, Credit Suisse estimates Mindtree Figure 10: Mindtree Dec-16 earnings estimates After a strong performance over FY14-16, Mindtree has been going through a period of uncertainty, given low visibility in its top accounts, the pricing pressure the company has been facing, and Brexit-related headwinds in its recently acquired business Bluefin. Mindtree has been considered as one of the better mid-size stocks in the sector, and the recent revenue weakness and lack of visibility has hurt the stock. The stock is down 27% in the last 12 months, though it has recovered in the last three months (up 9%). The stock now trades at 16x FY18 P/E, relatively rich valuations given where its top peers trade at. Management has indicated a subdued 3Q as well after a 1.7% QoQ decline in cc terms in 2Q FY17, although it does not expect a decline. We expect 0.5% QoQ growth in 3Q (in cc terms). With estimated 40 bp cross currency headwinds, the USD revenue may remain sequentially flat. Management has indicated several measures on the cost side; however, these may take longer to reflect in the numbers. Wage hike had 230 bp negative impact in 2Q and restructuring costs had 30 bp negative impact both of these should be absent in 3Q. We expect EBIT margins to expand by 120 bp QoQ in 3Q. Given the extremely low margin base now, there can be high volatility in margins now. Key things to watch: (1) Visibility on Mindtree's medium-term revenue growth can help in allaying market concerns. (2) Outlook on margins, which have come off significantly in the recent quarters. Expected date of results announcement: 19 January Rs mn Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 % QoQ % YoY Revenue ($ mn) % 5% Revenue 12,145 13,242 13,276 12,954 12, % 7% EBIT 1,802 1,911 1,483 1,158 1,318 14% -27% EBIT margin 14.8% 14.4% 11.2% 8.9% 10.2% 120 bps -470 bps Net income 1,509 1,560 1, ,078 14% -29% EPS % -29% Source: Company data, Credit Suisse estimates Hexaware After a couple of soft quarters, Hexaware had strong momentum in 2Q (Jun-16) and 3Q (Sep-16), led by better performance in its top accounts. With decent order wins and a strong deal pipeline, management also seems to have better visibility on the coming quarters. Margins on the other hand, could have little scope to expand given the nature of deals the company is participating in. High dividend payout has been a strong downside protection for the stock but there has been a recent cut in dividend payout. High client concentration makes the stock volatile and despite the 15% drop in India IT Services Sector 7

8 Figure 11: Hexaware Dec-16 results expectations stock price over the last 12 months, the valuation is still relatively expensive at 14x CY17 P/E as compared to many similarly sized peers. Based on management's comments during Sep-16 results, revenue growth is likely to be moderate in 4Q (Dec-16) due to furloughs, which may largely offset the volume growth that is expected during the quarter. Wage hike, together with moderate revenue can impact margins as well. We have modeled 1.5% cc QoQ growth (1.1% in USD terms) and 60 bp margin contraction. We have also modeled forex gain of about Rs60 mn. Key things to watch: (1) Hexaware's growth has been led by its top accounts for the past few quarters outlook for top accounts would be important. (2) Management's commentary on overall growth trajectory and margins for Expected date of results announcement: Early February Rs mn Dec-15 Sep-16 Dec-16 % QoQ % YoY Revenue ($ mn) % 10% Revenue 8,195 9,041 9, % 12% EBIT 1,171 1,434 1,408-2% 20% EBIT margin 14.3% 15.9% 15.3% -60 bps 100 bps Net income 994 1,114 1,082-3% 9% EPS (Rs) % 11% Source: Company data, Credit Suisse estimates NIIT Tech NIIT Tech's revenue growth trajectory slightly improved in 2Q after a few soft quarters and that impacted the margins as well. A couple of senior level exits have also dented the sentiment on the stock to some extent. However, the deal win momentum has been reasonable in the recent quarters and the top accounts have been stable to growing with the Brexit impact already in the base (related to the UK insurance product business). However, the company still lacks consistency in quarterly performance and 3Q might be a moderate quarter as well due to seasonality. After a 27% decline in the stock price over the last 12 months, NIIT Tech now trades at just over 9x FY18 P/E and with improving cash conversion, the FY18 FCF yield is extremely attractive at about 10%. We expect 0.3% constant currency growth in the revenue (before accounting for the hedging gains that are considered as part of revenue by the company). Some seasonal strength in the GIS business should be offset by seasonal weakness in other parts of the business. Margins may remain broadly flat QoQ. We have factored in forex hedging gains of Rs100 mn (accounted as part of revenue) but have not considered any provision reversal (on a government project settlement, for which a provision of Rs360 mn was created in Jun-16) during 3Q. Key things to watch: (1) Management's outlook on the key verticals insurance and travel (one US travel client has cut-back spending in 3Q). (2) EBIT margins have come off quite a bit from FY16 levels (13.5% in FY16). Management's outlook on the margin trajectory will also be important. Expected date of results announcement: 17/18 January. India IT Services Sector 8

9 Figure 12: NIIT Tech Dec-16 earnings estimates Rs mn Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 % QoQ % YoY Revenue ($ mn) % -1% Revenue 6,787 6,847 6,707 6,929 6, % 2% EBIT % -15% EBIT margin 14.2% 14.2% 10.3% 11.9% 11.9% -10 bps -230 bps Adjusted net income % -20% Adjusted EPS (Rs) % -19% Source: Company data, Credit Suisse estimates. * Before Rs360 mn provision related to a government contract India IT Services Sector 9

10 Currency to be neutral to net negative in 3Q With a depreciation in all the major currencies (GBP, EUR, JPY, CAD) against USD during the quarter (particularly post the US Presidential election results), we expect crosscurrency headwinds in the range of bp for the larger firms with TCS having the most impact and Infosys/Wipro likely to be towards the lower end. Given that the INR has also depreciated by 0.7% during the quarter, some of the cross currency impact will be offset in INR terms. Also, the positive movement in the end-of-period INR/USD rate should be offset by negative movement in other currencies translation impact on the net foreign currency denominated monetary assets may not be very material. Hedging gains/losses will depend on the hedged rate and maturity of hedges. Also, based on the current exchange rates, there could be further bp cross currency headwind in 4Q FY17 for the larger firms. Figure 13: Depreciation in all the major currencies against USD during the quarter Chg in avg quarterly exchange rates vs USD Mar-16 Jun-16 Sep-16 Dec-16 AUD 0.3% 3.2% 1.7% -1.2% CAD -2.6% 6.4% -1.2% -2.3% EUR 0.8% 2.3% -1.2% -3.3% GBP -5.6% 0.1% -8.5% -5.4% INR -2.3% 0.9% -0.1% -0.7% JPY 5.3% 6.8% 5.4% -6.3% SGD 0.4% 3.2% 0.4% -4.1% Source: Company data, Credit Suisse estimates Figure 14: Positive movement in end of period INR/USD rate that should be offset by negative movement in other currencies Absolute change in qtr ending rates (in Rs) 31-Mar Jun Sep Dec-16 USD GBP EUR AUD Source: Company data, Credit Suisse estimates India IT Services Sector 10

11 Asia Pacific/India Computer Services & IT Consulting Rating OUTPERFORM Price (30-Dec-16, Rs) Target price (12-mth, Rs) Upside/downside (%) 11.8 Mkt cap (Rs/US$ mn) 1,167,625 / 17,166 Enterprise value (US$ mn) 15,210 Number of shares (mn) 1,411 Free float (%) wk price range (Rs) ADTO-6M (US$ mn) 21.6 *Stock ratings are relative to the relevant country benchmark. ¹Target price is for 12 months. Research Analysts Anantha Narayan anantha.narayan@credit-suisse.com Share price performance Nitin Jain nitin.jain.2@credit-suisse.com The price relative chart measures performance against the S&P BSE SENSEX IDX which closed at 26, on 30/12/16. On 30/12/16 the spot exchange rate was Rs68.02/US$1 Performance 1M 3M 12M Absolute (%) Relative (%) HCL Technologies (HCLT.BO) Decent revenue momentum, stable margins and valuations make the stock attractive Strong positioning in key segments with margins at levels that can be sustained. Close to 60% of HCLT's revenue comes from infrastructure management and engineering services, where HCLT has strong positioning versus peers. Its current EBIT margin levels of around 19-20% are sustainable in the medium term, in our view. Good revenue momentum. While there have been concerns about the cloud cannibalising portions of the infra management business, HCLT has shown good momentum in recent quarters. While engineering services has been sluggish for a few quarters, the segment holds a lot of promise for the entire sector. Management is seeing good traction in its financial services business as well. There is no recent change to management's guidance for 12-14% revenue growth and % margins in FY17. Expect a decent 3Q. We expect HCL Tech to report 2.8% QoQ growth in cc (1.8% in USD terms), with US$10-11 mn incremental contribution from the IP partnership with IBM (about 60 bp contribution). We have not modeled any contribution from the Geometric and Butler acquisitions (we have however factored in revenue from Geometric in 4Q). Margins may be negatively impacted due to the staggered wage hike and the currency headwind. We expect 40 bp EBIT margin contraction. We have slightly cut earnings to account for the currency headwind. Valuation. HCLT now trades at 12x FY18 P/E, which we think is extremely attractive in absolute and relative terms. A cyclical upturn can drive up earnings and P/E multiples but even in the absence of that, continuing robust performance can increase investor comfort and help multiples. The infra business has been choppy in the past and any adverse change in the recent growth trajectory can raise fears again regarding this business and pose a downside risk. Financial and valuation metrics Year 3/16A 3/17E 3/18E 3/19E Revenue (US$ mn) 4, , , ,530.1 EBITDA (US$ mn) 1, , , ,872.4 EBIT (US$ mn) , , ,696.4 Net profit (US$ mn) , , ,495.2 EPS (Rs) Change from previous EPS (%) n.a. 0 (1) (1) Consensus EPS (US$) n.a EPS growth (%) nm nm P/E (x) Dividend yield (%) EV/EBITDA (x) P/B (x) ROE (%) Net debt/equity (%) Net Cash Net Cash Net Cash Net Cash Source: Company data, Thomson Reuters, Credit Suisse estimates India IT Services Sector 11

12 HCL Technologies (HCLT.BO / ) Price (30 Dec 2016): Rs827.40; Rating: OUTPERFORM; Target Price: Rs925.00; Analyst: Anantha Narayan Income Statement (US$ mn) 03/16A 03/17E 03/18E 03/19E Sales revenue 4,698 6,991 7,735 8,530 Cost of goods sold 3,071 4,621 5,095 5,609 EBITDA 1,010 1,533 1,688 1,872 EBIT 942 1,404 1,531 1,696 Net interest expense/(inc.) (126) (130) (160) (195) Recurring PBT 1,063 1,587 1,702 1,893 Profit after tax 839 1,253 1,344 1,495 Reported net profit 839 1,253 1,344 1,495 Net profit (Credit Suisse) 839 1,253 1,344 1,495 Balance Sheet (US$ mn) 03/16A 03/17E 03/18E 03/19E Cash & cash equivalents 1,789 2,145 2,539 3,125 Current receivables 1,618 1,662 1,839 2,028 Inventories Other current assets Current assets 3,771 4,240 4,857 5,681 Property, plant & equip ,167 1,333 1,444 Investments Intangibles Other non-current assets Total assets 6,002 6,935 7,704 8,627 Current liabilities 1,435 1,724 1,822 2,010 Total liabilities 1,788 2,115 2,213 2,401 Shareholders' equity 4,229 4,835 5,506 6,241 Minority interests Total liabilities & equity 6,017 6,949 7,719 8,642 Cash Flow (US$ mn) 03/16A 03/17E 03/18E 03/19E EBIT 942 1,404 1,531 1,696 Net interest (115) (158) (171) (196) Tax paid (224) (333) (357) (397) Working capital (140) 176 (124) (51) Other cash & non-cash items Operating cash flow 767 1,559 1,377 1,620 Capex (110) (461) (290) (256) Free cash flow to the firm 656 1,098 1,087 1,364 Investing cash flow (397) (593) (310) (275) Equity raised (75) (45) (0) (0) Dividends paid (424) (603) (673) (760) Financing cash flow (433) (610) (673) (760) Total cash flow (63) Adjustments Net change in cash (63) Per share 03/16A 03/17E 03/18E 03/19E Shares (wtd avg.) (mn) 1,412 1,416 1,427 1,427 EPS (Credit Suisse) (US$) DPS (US$) Operating CFPS (US$) Earnings 03/16A 03/17E 03/18E 03/19E Growth (%) Sales revenue (21.1) EBIT (28.8) EPS (27.9) Margins (%) EBITDA EBIT Valuation (x) 03/16A 03/17E 03/18E 03/19E P/E P/B Dividend yield (%) EV/sales EV/EBITDA EV/EBIT ROE analysis (%) 03/16A 03/17E 03/18E 03/19E ROE ROIC Credit ratios 03/16A 03/17E 03/18E 03/19E Net debt/equity (%) (38.8) (42.5) (44.5) (48.6) Net debt/ebitda (x) (1.63) (1.34) (1.45) (1.62) Source: Company data, Thomson Reuters, Credit Suisse estimates Company Background HCL Technologies is a large Indian IT services company. Blue/Grey Sky Scenario Our Blue Sky Scenario (Rs) 1,050 Sustainable improvement in the infrastructure management and engineering services and stable margin trajectory can help in earnings upgrade and multiple re-rating. Our Grey Sky Scenario (Rs) Engineering services business remains volatile and does not pickup, infra business revenue grows below the company average and margins remain under pressure. Also, any adverse policy action on the visa front can have some negative implications. Share price performance The price relative chart measures performance against the S&P BSE SENSEX IDX which closed at 26, on 30-Dec-2016 On 30-Dec-2016 the spot exchange rate was Rs67.94/US$1 India IT Services Sector 12

13 Asia Pacific/India Computer Services & IT Consulting Rating OUTPERFORM Price (30-Dec-16, Rs) Target price (12-mth, Rs) Upside/downside (%) 12.5 Mkt cap (Rs/US$ mn) 475,566 / 6,992 Enterprise value (Rs mn) 446,746 Number of shares (mn) Free float (%) wk price range (Rs) ADTO-6M (US$ mn) 16.9 *Stock ratings are relative to the relevant country benchmark. ¹Target price is for 12 months. Research Analysts Anantha Narayan anantha.narayan@credit-suisse.com Share price performance Nitin Jain nitin.jain.2@credit-suisse.com The price relative chart measures performance against the S&P BSE SENSEX IDX which closed at 26, on 30/12/16. On 30/12/16 the spot exchange rate was Rs68.02/US$1 Performance 1M 3M 12M Absolute (%) Relative (%) Tech Mahindra Limited (TEML.BO / TECHM IN) Steady growth, possibility of margin expansion and attractive valuations form a potent combination Strong telecom positioning and a reasonable scale in the enterprise segment. Tech Mahindra has half its revenue accruing from the telecom segment it has the largest practice in telecom among Indian companies and has strong capabilities given its British Telecom legacy. While we do not think that the enterprise segment is greatly differentiated, it has reasonable scale in it and is growing slightly ahead of the industry average. The telecom business and margins seem to have bottomed out. The telecom business was hit over the past few quarters due to M&A situations with top clients and due to a restructuring of LCC, that it had acquired. Both appear to be behind the company now management expects FY17 growth to pick up to a low single-digit number and FY18 growth to be 5-10%. Improvement in LCC's margins and operational efficiencies can help margins expand from the current sub-optimal levels. A strong 3Q likely. With slight QoQ improvement in the Comviva revenue and relatively stable LCC, we expect the telecom business to grow at 2.5% in cc. Enterprise business should organically grow at 2% in cc (Target Group should add about 60 bp). Overall, TechM may report 2.1% cc organic revenue growth. Absence of restructuring cost of 120 bp incurred in 2Q, a seasonally better quarter for Comviva and other operational efficiency measures, should more than offset the currency headwinds on margins. We have slightly cut earnings to account for the currency headwind. Tech Mahindra now trades at 12x FY18 P/E, which we think is extremely attractive. Any new large telecom contracts or some proof of management's successful attempts to improve margins can be important stock price drivers, besides any cyclical recovery. On the flip side, if the telecom business weakens again, there is a risk that management's efforts to improve margins will fail, which could hurt the stock. Financial and valuation metrics Year 3/16A 3/17E 3/18E 3/19E Revenue (Rs mn) 264, , , ,896.5 EBITDA (Rs mn) 42, , , ,903.6 EBIT (Rs mn) 35, , , ,994.9 Net profit (Rs mn) 30, , , ,914.8 EPS (CS adj.) (Rs) Change from previous EPS (%) n.a. (1.5) (0.9) (0.9) Consensus EPS (Rs) n.a EPS growth (%) 16.7 (2.2) P/E (x) Dividend yield (%) EV/EBITDA (x) P/B (x) ROE (%) Net debt/equity (%) Net Cash Net Cash Net Cash Net Cash Source: Company data, Thomson Reuters, Credit Suisse estimates India IT Services Sector 13

14 Tech Mahindra Limited (TEML.BO / TECHM IN) Price (30 Dec 2016): Rs488.70; Rating: OUTPERFORM; Target Price: Rs550.00; Analyst: Anantha Narayan Income Statement (Rs mn) 03/16A 03/17E 03/18E 03/19E Sales revenue 264, , , ,896 Cost of goods sold 183, , , ,117 EBITDA 42,707 45,839 54,963 61,904 EBIT 35,118 36,256 44,636 50,995 Net interest expense/(inc.) (2,663) (2,159) (2,543) (2,984) Recurring PBT 39,189 41,169 47,579 54,379 Profit after tax 31,006 30,470 36,160 41,600 Reported net profit 30,660 30,556 35,535 40,915 Net profit (Credit Suisse) 30,660 30,019 35,535 40,915 Balance Sheet (Rs mn) 03/16A 03/17E 03/18E 03/19E Cash & cash equivalents 35,226 43,707 67,849 94,475 Current receivables 57,705 65,415 69,825 76,064 Inventories Other current assets 56,587 47,408 50,604 55,125 Current assets 149, , , ,665 Property, plant & equip. 29,899 42,282 40,943 39,612 Investments Intangibles 18,503 18,703 19,103 19,753 Other non-current assets 26,026 34,377 34,377 34,377 Total assets 224, , , ,514 Current liabilities 57,792 68,943 72,791 78,117 Total liabilities 76,173 89,457 93,305 98,631 Shareholders' equity 145, , , ,380 Minority interests 1,936 5,194 5,819 6,504 Total liabilities & equity 224, , , ,514 Cash Flow (Rs mn) 03/16A 03/17E 03/18E 03/19E EBIT 35,118 36,256 44,636 50,995 Net interest Tax paid (8,183) (10,699) (11,419) (12,779) Working capital (7,291) (4,446) (4,658) (6,707) Other cash & non-cash items 13,715 15,238 16,212 17,677 Operating cash flow 33,359 36,348 44,771 49,185 Capex (9,985) (22,167) (9,388) (10,227) Free cash flow to the firm 32,159 35,148 43,571 47,985 Investing cash flow (18,587) (30,968) (10,013) (10,912) Equity raised Dividends paid (12,181) (8,177) (9,199) (10,221) Financing cash flow 7,768 (10,246) (11,516) (12,920) Total cash flow 22,540 (4,865) 23,242 25,354 Adjustments Net change in cash 22,540 (4,865) 23,242 25,354 Per share 03/16A 03/17E 03/18E 03/19E Shares (wtd avg.) (mn) EPS (Credit Suisse) (Rs) DPS (Rs) Operating CFPS (Rs) Earnings 03/16A 03/17E 03/18E 03/19E Growth (%) Sales revenue EBIT (1.0) EPS 16.7 (2.2) Margins (%) EBITDA EBIT Valuation (x) 03/16A 03/17E 03/18E 03/19E P/E P/B Dividend yield (%) EV/sales EV/EBITDA EV/EBIT ROE analysis (%) 03/16A 03/17E 03/18E 03/19E ROE ROIC Credit ratios 03/16A 03/17E 03/18E 03/19E Net debt/equity (%) (17.0) (18.4) (28.6) (36.6) Net debt/ebitda (x) (0.59) (0.65) (0.98) (1.30) Source: Company data, Thomson Reuters, Credit Suisse estimates Company Background Tech Mahindra is a mid-sized Indian IT services company focused on the telecom vertical. It acquired majority stake in Mahindra Satyam (not rated) in Blue/Grey Sky Scenario Our Blue Sky Scenario (Rs) The telecom business shows a strong recovery in FY18, margins to recover and the enterprise business sustains its industry level growth. Our Grey Sky Scenario (Rs) Despite initial signs of recovery, the telecom segment continues to grow at a sluggish rate. Margins remain flat or expand only to a small extent. Adverse visa policies in the US impact the business and margins negatively. Share price performance The price relative chart measures performance against the S&P BSE SENSEX IDX which closed at 26, on 30-Dec-2016 On 30-Dec-2016 the spot exchange rate was Rs67.94/US$1 India IT Services Sector 14

15 Asia Pacific/India Computer Services & IT Consulting Rating NEUTRAL Price (30-Dec-16, Rs) 2,362 Target price (12-mth, Rs) 2,300 Upside/downside (%) -2.6 Mkt cap (Rs/US$ mn) 4,654,052 / 68,422 Enterprise value (Rs mn) 4,539,013 Number of shares (mn) 1,970 Free float (%) wk price range (Rs) 2,732-2,105 ADTO-6M (US$ mn) 44.8 *Stock ratings are relative to the relevant country benchmark. ¹Target price is for 12 months. Research Analysts Anantha Narayan anantha.narayan@credit-suisse.com Nitin Jain nitin.jain.2@credit-suisse.com Tata Consultancy Services (TCS.BO / TCS IN) Structurally well placed, but near-term lack of visibility Structurally well placed. TCS remains among the best placed IT companies to ride through the on-going shifts in technology, with its scale, long client relationships and capabilities. Margins, however, may not sustain at the current high levels in the medium to longer term, in our view. Lack of visibility in the near term. The last few quarters have been soft for the company, for a variety of reasons (the Japan business, the Diliigenta subsidiary, India and BFSI). The recent macro uncertainty has also impacted the business somewhat. While the company expects the revenue deferrals to eventually bunch-up in the coming quarters, the visibility of that remains low at the moment, in our view. A seasonally soft quarter; India deferred revenue could aid overall growth. Management has previously indicated that the sequential growth in 2H FY17 may be better than the corresponding growth last year, accounting for the deferred revenue of US$25 mn in the India business and soft sequential growth in 3Q and 4Q last year. We expect the company to report 1.5% QoQ growth (cc) in 3Q FY17 (not accounting for any lumpy growth in the India business). We expect 30 bp QoQ EBIT margin expansion in 3Q, helped by the absence of US$26 mn relating to the Orange County lawsuit settlement, should support margins by 60 bp. We have slightly cut earnings to account for the currency headwind. The potential upside risk to our TP includes any uptick in the demand environment, significant currency depreciation and no major policy actions on the US visa front. Downside risks are any further deterioration in the demand environment and any adverse developments in the US visa rules. Share price performance The price relative chart measures performance against the S&P BSE SENSEX IDX which closed at 26, on 30/12/16. On 30/12/16 the spot exchange rate was Rs68.02/US$1 Performance 1M 3M 12M Absolute (%) Relative (%) Financial and valuation metrics Year 3/16A 3/17E 3/18E 3/19E Revenue (Rs mn) 1,086, ,183, ,286, ,433,008.9 EBITDA (Rs mn) 306, , , ,702.0 EBIT (Rs mn) 287, , , ,314.2 Net profit (Rs mn) 242, , , ,146.5 EPS (CS adj.) (Rs) Change from previous EPS (%) n.a. (0.0) (1.4) (1.3) Consensus EPS (Rs) n.a EPS growth (%) P/E (x) Dividend yield (%) EV/EBITDA (x) P/B (x) ROE (%) Net debt/equity (%) Net Cash Net Cash Net Cash Net Cash Source: Company data, Thomson Reuters, Credit Suisse estimates India IT Services Sector 15

16 Tata Consultancy Services (TCS.BO / TCS IN) Price (30 Dec 2016): Rs2,362; Rating: NEUTRAL; Target Price: Rs2,300; Analyst: Anantha Narayan Income Statement (Rs mn) 03/16A 03/17E 03/18E 03/19E Sales revenue 1,086,462 1,183,782 1,286,110 1,433,009 Cost of goods sold 608, , , ,820 EBITDA 306, , , ,702 EBIT 287, , , ,314 Net interest expense/(inc.) (23,070) (29,096) (34,333) (40,513) Recurring PBT 318, , , ,827 Profit after tax 243, , , ,826 Reported net profit 242, , , ,146 Net profit (Credit Suisse) 242, , , ,146 Balance Sheet (Rs mn) 03/16A 03/17E 03/18E 03/19E Cash & cash equivalents 104, , , ,612 Current receivables 280, , , ,317 Inventories Other current assets 22,229 20,085 21,821 24,313 Current assets 407, , , ,242 Property, plant & equip. 117, , , ,284 Investments 313, , , ,730 Intangibles 41,569 41,569 41,569 41,569 Other non-current assets 31,711 7,371 7,371 7,371 Total assets 912,128 1,015,323 1,193,897 1,396,195 Current liabilities 154, , , ,098 Total liabilities 175, , , ,328 Shareholders' equity 731, ,556 1,006,719 1,190,061 Minority interests 3,542 3,890 4,570 5,250 Total liabilities & equity 911,319 1,015,767 1,194,341 1,396,639 Cash Flow (Rs mn) 03/16A 03/17E 03/18E 03/19E EBIT 287, , , ,314 Net interest Tax paid (75,027) (81,842) (88,271) (98,000) Working capital (28,679) (31,034) (12,533) (21,973) Other cash & non-cash items 18,879 20,194 21,888 24,388 Operating cash flow 203, , , ,729 Capex (19,869) (19,431) (17,814) (18,208) Free cash flow to the firm 183, , , ,521 Investing cash flow (248,122) (55,253) (19,105) (21,287) Equity raised 15,122 (46,007) 0 (0) Dividends paid (100,138) (104,902) (114,124) (126,804) Financing cash flow (60,071) (115,699) (79,791) (86,292) Total cash flow (105,118) 43, , ,150 Adjustments Net change in cash (105,118) 43, , ,150 Per share 03/16A 03/17E 03/18E 03/19E Shares (wtd avg.) (mn) 1,965 1,971 1,971 1,971 EPS (Credit Suisse) (Rs) DPS (Rs) Operating CFPS (Rs) Earnings 03/16A 03/17E 03/18E 03/19E Growth (%) Sales revenue EBIT EPS Margins (%) EBITDA EBIT Valuation (x) 03/16A 03/17E 03/18E 03/19E P/E P/B Dividend yield (%) EV/sales EV/EBITDA EV/EBIT ROE analysis (%) 03/16A 03/17E 03/18E 03/19E ROE ROIC Credit ratios 03/16A 03/17E 03/18E 03/19E Net debt/equity (%) (11.2) (14.8) (27.8) (37.4) Net debt/ebitda (x) (0.27) (0.38) (0.79) (1.14) Source: Company data, Thomson Reuters, Credit Suisse estimates Company Background TCS is the largest Indian IT services company providing consulting and software services. Blue/Grey Sky Scenario Our Blue Sky Scenario (Rs) (from 2,840) 2,870 Revenue growth accelerates significantly in 2H, getting ahead of Infosys and margins expand YoY in FY17. No material change in visa policies under Trump administration. In this scenario, the stock can potentially re-rate. Our Grey Sky Scenario (Rs) (from 1,910) 1,930 Macro headwinds, including those emerging from Brexit and US visa policies slows down the revenue growth and margins. In this scenario, earnings cuts may be coupled with P/E de-rating. Share price performance The price relative chart measures performance against the S&P BSE SENSEX IDX which closed at 26, on 30-Dec-2016 On 30-Dec-2016 the spot exchange rate was Rs67.94/US$1 India IT Services Sector 16

17 Asia Pacific/India Computer Services & IT Consulting Rating NEUTRAL Price (30-Dec-16, Rs) 1,011 Target price (12-mth, Rs) 1,050 Upside/downside (%) 3.9 Mkt cap (Rs/US$ mn) 2,310,108 / 33,962 Enterprise value (Rs mn) 1,959,887 Number of shares (mn) 2,286 Free float (%) wk price range (Rs) 1, ADTO-6M (US$ mn) 76.8 *Stock ratings are relative to the relevant country benchmark. ¹Target price is for 12 months. Research Analysts Anantha Narayan anantha.narayan@credit-suisse.com Nitin Jain nitin.jain.2@credit-suisse.com Infosys Limited (INFY.BO / INFO IN) Lack of visibility in revenue growth pick-up prevents us from getting constructive Decent progress under new management. Infosys had a decent turnaround under the new CEO, Vishal Sikka, over the last couple of years. The positioning of the company has improved, deal win momentum pickedup, the growth has accelerated and margins are well within the guided range. Near-term caution led by macro as well as company-specific factors. Despite a strong performance in 2Q FY17 (3.9% QoQ growth in constant currency, the best among the peers), Infosys' management has sounded cautious on near-term prospects. While the RBS deal cancellation (3,000 FTEs) has been one of the reasons for the caution, there seem to be other company-specific factors as well (consulting and BPO businesses), besides the overall cyclical challenges that the industry is facing. A soft quarter likely, impacted by several company specific factors. We expect Infosys to report flat sequential revenue in cc terms (-0.9% in USD terms, accounting for estimated 90 bp cross currency headwind). This includes about 100 bp of impact that we have assumed for the rampdown of the RBS contract. Margins may deteriorate slightly by 30 bp QoQ net negative currency impact and headwind from the RBS ramp down. Management has guided for a weak 2H, and any sustained weakness in FY18 and any adverse visa policy actions under the Trump administration are the key downside risks to our TP and rating. Cyclical pick-up in revenue growth and any material INR depreciation are the key upside risks. Infosys has been trading at 10% discount to TCS, and we believe this can sustain for some time given the company-specific factors Share price performance The price relative chart measures performance against the S&P BSE SENSEX IDX which closed at 26, on 30/12/16. On 30/12/16 the spot exchange rate was Rs68.02/US$1 Performance 1M 3M 12M Absolute (%) Relative (%) Financial and valuation metrics Year 3/16A 3/17E 3/18E 3/19E Revenue (Rs mn) 624, , , ,326.5 EBITDA (Rs mn) 170, , , ,109.6 EBIT (Rs mn) 156, , , ,509.1 Net profit (Rs mn) 134, , , ,753.6 EPS (CS adj.) (Rs) Change from previous EPS (%) n.a. (0.6) (1.1) (0.8) Consensus EPS (Rs) n.a EPS growth (%) P/E (x) Dividend yield (%) EV/EBITDA (x) P/B (x) ROE (%) Net debt/equity (%) Net Cash Net Cash Net Cash Net Cash Source: Company data, Thomson Reuters, Credit Suisse estimates India IT Services Sector 17