FW: Indian IT Services : Satyam debacle to help other top tier players

J.P. Morgan Research Asia Pacific Equity Research ________________________________
Indian IT Services: Satyam debacle to help other top tier players

We believe that Satyam's debacle today would be positive for top tier Indian IT players as this
would lead to business from Satyam being diverted to other Indian offshore players and/or MNCs
(Accenture/IBM). We believe that this would be viewed as a company specific issue and hence most
customers would likely shift work to Indian players only that have higher expertise in offshore.
Having said that, it does raise issues on corporate governance practices in India overall across all
sectors and hence we believe that work would move to only the top tier players - we believe Infosys
remains the most significant gainer followed by TCS and Wipro.

* * In terms of financial impact, Satyam's disclosure today indicates revenues of Rs 21
billion for 2QFY09. This implies annual run-rate of Rs 84 billion or US$ 1.9 billion. We believe
that most of this work (~70-80%) could get shifted. This would imply US$ 1.5 billion of offshore
work available. Assuming 75% of this goes to offshore players, we believe that Infosys/TCS/Wipro
could potentially gain US$ 250-300 m of annual revenues in FY10E. This would mean a positive revenue
impact of 6%/5%/4% for our revenue estimates of Infosys/TCS/Wipro. Given a potentially lower
profitability of this business, it would increase our FY10 EPS estimates by 3-4% for all these
players.

* * On a technical basis, this would make the remaining investors move money from Satyam to
top tier players. We believe Infosys would be the biggest beneficiary of this move.

* * While near-term offshore business is expected to be weak, we continue to expect offshore
players to gain market share in a slowdown and are positive on Infosys/TCS on a 12-month investment
view.

Click here <https://mm.jpmorgan.com/stp/t/c.do?i=3D0A1-CD&u=a_p*d_255629.pdf*h_-2sk388p> for the
full Note and disclaimers.

Manoj Singla, CFA

Bhavin Shah

Nishit Jasani

Analyst certification: I certify that: (1) all of the views expressed in this research accurately
reflect my personal views about any and all of the subject securities or issuers; and (2) no part of
my compensation was, is, or will be directly or indirectly related to the specific recommendations
or views expressed herein. Important disclosures, including price charts, related to the companies
recommended in this report are available in the PDF attachment, through the search function on J.P.
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Credits : wellwishers of Satyam stakeholders,J P Morgan
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