Post Satyam, analysts see Infy, TCS, Wipro gaining

Most brokerages have advised investors to switch over from Satyam to either Infosys , TCS , or Wipro . They expect the three IT firms to gain as Satyam's clients might move over. They see midcap IT companies losing out as clients move to large players on account of cash problems. The trio, as per the Anand Rathi report, is likely to gain USD 200-300 million revenues from Satyam's fall.

Here is a verbatim transcript of Sunita Nagpal's comments on CNBC-TV18. Also see the accompanying video.

The Infosys stock has gained by 6% in last two trading sessions. TCS is up by nearly 3%. This is because most analysts have advised a discontinued coverage on Satyam. They have advised investors to switch over from Satyam to either Infosys, TCS, or Wipro.

Also, there is expectation that vendor consolidation in the country and these companies might gain because now this shift will happen and flight will be to safety. This means bigger IT companies are likely to gain. Even midcap IT companies are likely to lose out because clients who have exposure to smaller and midcap IT companies might like to reconsider as there could be similar problems, not of inflated books but because of cash problems these companies might be facing. So, they might move to the bigger companies.

If you look at what kind of annualized billing Satyam was doing, analyst believe that it was over USD 2 billion with about 650 clients. We don't know whether this figure is correct but have to rely on this. Analysts are expecting large migration over the next three months to other vendors. They expect most business will move to Infosys, TCS, or Wipro as these are joint projects done with other companies, so clients are likely to shift to other companies. These three companies, as per the Anand Rathi report, are likely to gain USD 200-300 million revenues from Satyam's fall. These are the types of gains that is expected.

Another factor that analysts are now talking about is  because of a lot of employees loosing jobs and seeing uncertainity over their jobs, the increase in salaries might not happen as was expected earlier. So, the cost might not go up as much as expected earlier for IT companies.