UPDATE: JP Morgan Downgrades Syntel from Overweight to Neutral on Margin Headwinds

JP Morgan reduced its rating on Syntel

from Overweight to Neutral but raised its price target from $65 to $66. JP Morgan commented, "YNT let the rupee-based benefit flow through its margins/earnings in F1H12, which is driving significant upside in CY12 but could potentially limit CY13 earnings growth (we estimate low-single-digit earnings growth in CY13, as of now). We estimate that every 1% potential appreciation in the Indian rupee equals 40bps in margins. While the company's CY12 revenue growth appears on track to be in line with the industry average rates, we believe the new guidance, specifically at the top end, still represents a high bar even if the macro does not further deteriorate." Syntel closed at $59.92 on Friday.