Although the rupee depreciated 123 in 2013 we do not

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Unformatted text preview: sts expect the rupee to end around 60/USD in 2014. Figure 14: Deutsche Bank forecast for the INR/USD rates Figure 15: Trend in INR/USD rate INR/USD INR/USD Deprn/(apprn) yoy ()yoy (INR) 63.0 62.5 62.5 13.5% 62.2 62 62.0 16% 62.0 60.2 13.7% 60 61.5 55 54.5 1.5% 4% 61.0 0% -3.7% 60.5 50 60 60.0 48.0 47.3 -3.0% 45.5 -4% -8% 45 59.5 12% 8% 5.5% -12% 59.0 -16% 40 58.5 Spot 3M fw d 6M fw d FY10 12Mfw d Source: Deutsche Bank FY11 FY12 FY13 FY14E FY15E Source: Bloomberg Finance L.P, Deutsche Bank Currency depreciation aids margins and profits Our two-dimensional sensitivity analysis shows that, ceteris paribus, for every 1% change in the rupee, the net incomes of the top-tier Indian vendors fluctuate 1.5–2%. Figure 16: Sensitivity of Infosys’ FY15E EPS to changes in exchange rates --------------------Curr (apprn)/deprn------------------------FY15E -10% -5% 0% 5% 10% Blended volume growth INR/USD 54.1 57.1 60.2 63.2 66.2 11% 166.0 181.2 196.4 211.5 226.7 13% 170.9 186.4 201.9 217.4 232.9 15% 175.9 170.9 207.6 223.2 239.0 17% 180.8 196.9 213.0 229.1 245.2 19% 185.7 202.1 218.6 234.9 251.3 Source: Deutsche Bank Page 14 Deutsche Bank AG/Hong Kong 7 January 2014 Software & Services Indian IT Services Figure 17: Sensitivity of TCS’s FY15E EPS to changes in exchange rates --------------------Curr (apprn)/deprn------------------------- Blended volume growth FY15E -10% -5% 0% 5% INR/USD 54.1 57.1 60.2 63.2 10% 66.2 16% 102.9 108.6 114.2 119.9 125.6 18% 104.5 110.3 116.0 121.8 127.5 20% 106.2 112.0 117.5 123.7 129.5 22% 107.8 113.7 119.7 125.6 131.5 24% 109.4 115.4 121.5 127.5 133.5 Source: Deutsche Bank Figure 18: Sensitivity of Wipro’s FY15E EPS to changes in exchange rates --------------------Curr (apprn)/deprn-------------------------10% -5% DBe 5% 10% INR/USD Blended volume growth FY15E 54.1 57.1 60.2 63.2 66.2 13% 29.7 32.5 35.4 38.2 41.1 15% 30.4 33.3 36.2 39.1 42.0 17% 31.1 34.1 37.1 40.0 42.9 19% 31.9 34.9 37.9 40.9 43.9 21% 32.6 35.7 38.7 41.8 44.8 Source: Deutsche Ba...
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This document was uploaded on 02/06/2014.

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