Benefit of rupee fall to vary across IT cos

NEW DELHI, Sept 11 (Reuters): Benefits from rupee depreciation to be different across Indian IT companies, with maximum positive impact on Tata Consultancy Services Ltd and Tech Mahindra Ltd among large caps and Persistent Systems Ltd among midcaps, said Macquarie Research.

Macquarie upgraded Wipro Ltd and Hexaware Technologies Ltd to 'outperform'; top picks are HCL Technologies Ltd and TCS (in large caps) and Larsen & Toubro Infotech Ltd (in midcaps).

It expects companies to retain some benefits of a falling rupee and use the rest to increase SG&A efforts, fight pricing pressures on renewals.

While midcap companies will grow much faster than overall industry growth rate of about 8.0 per cent, growth in large caps will have varying trends in FY19, said Macquarie analysts.

Macquarie expects TCS to post strongest organic growth of 10.1 per cent versus 5-8 per cent for its peers in FY19.

Twenty out of 43 analysts rate Wipro 'hold', 16 rate 'sell' or lower and seven rate 'buy' or higher, according to Thomson Reuters data.

On Hexaware, 11 out of 19 analysts rate 'sell' or lower, six rate 'buy' or higher, two 'hold'.

Wipro has risen 3.4 per cent this year as of last close, while Hexaware has climbed 33.8 per cent in the same period.

TCS has gained 54 per cent this year as of last close, while Tech Mahindra has risen 52 per cent.