India: Tier-1 IT Services
An industry in transformation
The IT services sector is in the midst of a major transformation, where technologies not only create revenue opportunities for Indian vendors, but also cannibalize existing revenues. More importantly, it is also changing the business models of companies. This duality of revenue creation & destruction will drive higher revenue volatility. We prefer stocks where risks to earnings and valuations are low. We initiate at BUY on Wipro and Infosys, with TCS, HCL Tech and Tech Mahindra at HOLD.