Most IT cos to post tepid Q4 nos; Wipro top pick: IIFL

Post disappointing Infosys guidance for FY13  Aniruddha Mehta, Research Analyst, IIFL has reduced the the company's EPS estimates by about 5-6% for next year. "In the worse case secnario the EPS estimates would be 10%, so the price would come to around Rs 2,400 to 2,500," he told CNBC-TV18.

He expects other frontline companies to report tepid performance as fas as revenues are concerned. Meanwhile, IIFL has a merket performer rating on TCS, Infosys and a buy rating on HCL Tech, Wipro. Of the four, Wipro is its top pick.

Below is the edited transcript of the interview. Also watch the accompanying video.

Q: By how much are you bringing down your EPS and stock target estimates now after looking at these numbers and guidance?

A: Definitely, the guidance wasn’t good as well as the commentary the management has given right now has incrementally turned negative with comments on ramp downs. So, on the best case we would reduce our EPS estimates for next year by about 5-6% and worse case about 10%, so the price would come to around Rs 2400 to 2500 for the company.

Q: Given what you heard on guidance what is your own growth and earnings target?

A: Our volume growth assumptions are 11-12% and EPS should change but it should be around Rs 160-164 for the full year.

Q: What kind of multiples would you assign now to the stock given the performance and given how much you brought down your EPS estimates?

A: Definitely the multiples would reduce, we used to give around 17X one year forward, and we would now reduce it to around 14.5-15X after the results.

Q: How exactly did you enter this quarter in terms of what was your rating on buy is or neutrals being the top four IT faces?

A: We have market performer rating for both TCS and Infosys. We had a buy rating on HCL Tech as well as Wipro. So Wipro is our top pick from the top four, right now.

Q: What are you expecting to hear from other frontline companies now this quarter?

A: The performance for the quarter in revenue terms would definitely be tepid. We would want to hear more on what the clients are thinking, on the Budgets and the spending. Would like to compare whether it’s specific with Infosys or it’s an industry wide phenomenon. That is the main thing we want to hear from the company.