After a sustained spell of underperformance in 2016 and 2017, the sector has started outperforming the Indian markets since Q3CY17 due to under-ownership by institutions, high valuations in many sectors in India, the hope of a growth pick-up in IT due to the improving US and global macro, and INR depreciation. Fundamentals have not necessarily kept up for the larger companies: Belying hopes of a growth pick-up driven by an improving global macro, earnings for the larger companies have not surprised positively so far. There have been significant earnings revisions YTD in some of the smaller companies, however. What\u2019s baked in the stock prices? We have revisited our DCF models to see the underlying assumptions for the larger companies even as we acknowledge that stocks rarely trade at their \u201cfair prices\u201d. TCS is pricing in 10% ten-year revenue CAGR (FY28 revenue of $50 bn) with eventual margins of 23%, while Infosys bakes in 7% growth with 22% margins. Mindtree and Hexaware look expensive, Wipro and HCLT cheap. Our key picks: Our key picks are TechM (further margin expansion, possible telecom upside) and HCLT (sustainable double-digit growth, attractive valuations) among the larger stocks, Persistent (growth and margin pick-up, attractive valuations) and Cyient (decent valuations) among the smaller ones. We are revising our estimates by 2-6% with our new INR\/USD assumption of 67 and also revise our TPs by 5-12% due to higher target multiples. We upgrade Wipro to NEUTRAL, downgrade Hexaware to UNDERPERFORM and downgrade NIIT Tech to NEUTRAL. Among the two large stocks, we prefer Infosys over TCS given the 20%+ P\/E discount and growth that may not materially differ over the next few years. IT has outperformed by 15% YTD Earnings for the larger companies have not surprised positively so far. For example, FY19 estimates for TCS, Infosys and HCLT have barely moved YTD while Wipro\u2019s estimates have been cut. Growth rates are higher for some midsized companies due to their lower exposure to legacy work that is getting deflated by the cloud and automation and also due to their large clients which have a disproportionate impact. Additionally, margins for many of them had contracted over the last 3-4 years and they are now reversing somewhat. There have been some significant earnings surprises in many of the smaller names \u2014 Mindtree, Tech Mahindra, L&T Infotech, L&T Technology, Mphasis and Hexaware have all seen reasonable estimate increases YTD. Q4 results confirm this trend.