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Fly News Breaks for February 20, 2020
WIT, INFY
Feb 20, 2020 | 11:55 EDT
JPMorgan analyst Ankur Rudra last night initiated coverage of the India IT Services sector, naming Infosys (INFY) the top pick with an Overweight rating. Infosys is likely to enjoy "strong growth resurgence" from customer experience, cloud and advanced analytics adoption, Rudra told investors in a research note. The analyst believes the company has the "highest potential for rerating" as its growth recovers and the market rewards consistent shareholder returns. On the other hand, Rudra started Wipro (WIT) with an Underweight rating. Wipro appears poorly positioned to capture the digital transformation-led opportunity given its inconsistent execution, patchy client feedback, and poor integration of acquisitions, says the analyst, who makes the company the top avoid in the sector. Other names initiated by Rudra include Tata Consultancy Services and HCL Technologies at Overweight and Tech Mahindra at Neutral. The market incorrectly perceives Indian IT Services firms as "cloud-losers," which has created a "mispricing opportunity," the analyst argues. The 6%-8% growth the market is pricing in appears pessimistic, says Rudra, who forecasts 10%-12% growth.
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