13 April 2012

FII trading activity on BSE and NSE on Capital Market Segment

Please Share:: Bookmark and Share India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��



FII trading activity on BSE and NSE on Capital Market Segment

FII trading activity on BSE and NSE in Capital Market Segment(In Rs. Crores)
CategoryDateBuy ValueSale ValueNet Value
FII13/4/122,634.232,496.98137.25

  Disclaimer:
  • FII trading data across BSE and NSE collated on the basis of trades executed today by FIIs on BSE and NSE.
  • This trade data is provisional and subject to change, inter-alia, on account of custodial confirmation process, modifications etc. 

DII trading activity on BSE and NSE on Capital Market Segment

Please Share:: Bookmark and Share India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��



DII trading activity on BSE and NSE on Capital Market Segment.
DII trading activity on BSE and NSE on Capital Market Segment(In Rs.Crores)
CategoryDateBuy ValueSale ValueNet Value
DII13/4/121,329.611,809.29-479.68


  • DII trading data across BSE and NSE collated on the basis of trades executed today by Banks, DFIs,Insurance and MFs on BSE and NSE.
  • This trade data is provisional and subject to change, inter-alia, on account of custodial confirmation process, modifications etc.

13/4/12: Categories Turnover (BSE) (Rs. crore) Clients NRI Proprietary Trade Data

Please Share:: Bookmark and Share India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��



Categories Turnover (BSE)

(Rs. crore)
ClientsNRIProprietary
Trade DateBuySalesNetBuySalesNetBuySalesNet
13/4/121,873.791,820.6753.121.450.540.91667.84686.79-18.95
12/4/121,529.321,529.71-0.401.020.600.43529.49529.85-0.36
11/4/121,583.421,561.7421.680.790.510.28566.33560.136.20
Apr , 1211,918.5411,780.47138.0713.173.559.614,198.474,236.42-37.95
Since 1/1/12130,792.33132,506.63-1,714.2989.2785.723.5546,675.4345,475.921,199.51

  Disclaimer:
  • DII and FII turnover is consolidated information of BSE and NSE.
  • BSE data is compiled on the basis of marking of 'client type' while executing orders on BOLT-TWS in equity segment.
  • NSE Data has been compiled on the basis of trading codes entered by the trading members at the time of order entry and corresponding client category classification provided by the trading members as part of unique client code details upload.
  • NRI - Non Resident Indians
  • FII - Foreign Institutional Investors
  • DII -Domestic Institutional Investors (Includes Bank, DFIs, Insurance, New Pension Scheme and MF).

Infy falls 13% on BSE, investors lose Rs 20,000 cr :rediff

Please Share:: Bookmark and Share India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��



In its biggest fall in nearly three years, Infosys on Friday plummeted by about 13 per cent, wiping out nearly Rs 20,000 crore (Rs 200 billion) in market value, as disgruntled investors resorted to hectic selling after a muted revenue guidance for the current fiscal by the software bellwether.
After opening nearly 8 per cent down in morning trade, selling pressure intensified with Infosys stock closing at Rs 2403.30, down 12.61 per cent lower on the BSE. During the day, the stock dived 13 per cent to a intra-day low of Rs 2,390.10.

Automobile: Q4FY12 Result Preview: Centrum

Please Share:: Bookmark and Share India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Strong revenue growth to drive up earnings
We expect a strong quarter for auto companies under our
coverage universe* driven by 30.5% revenue growth YoY
and 14% QoQ. We expect EBITDA margins to expand by
59bps YoY but expect this to contract by 26bps QoQ.
Among large-cap auto stocks, Tata Motors and Hero
MotoCorp is likely to be the best performers followed by
Bajaj Auto. Overall, we expect net profit to increase by
35% YoY and 27% QoQ in 4QFY12E for the companies
under our coverage universe.
Key Highlights:
􀂁 Volume momentum to be strong for 4W: During the
quarter, volume momentum for 4W companies has
remained strong (up 13% YoY and 25% QoQ) compared to
two-wheeler companies (up 6% YoY but down 2.5% QoQ,
in line with overall slowdown witnessed by the industry).
􀂁 Margins a mixed bag: Input cost pressure is likely to
remain higher on both YoY and QoQ basis. However,
strong volume growth for most of the companies will
largely help to offset cost pressures. For our coverage
universe, we expect EBITDA margins to expand by 59bps
YoY, but contract 26bps QoQ. We expect a sharp
sequential improvement in margins for both Maruti and
Ashok Leyland led by strong volume recovery for both
companies. For M&M, we expect sustained margin
pressure on account of an adverse mix (lower tractor
sales). We expect Tata Motors to drive sector growth with
strong 67% earnings growth driven by 44% YoY growth in
revenues and 186bps margin expansion YoY.
􀂁 Strong revenue growth to drive strong earnings
growth: We expect adjusted PAT to register a growth of
35% YoY and 27% QoQ. Among large-cap auto stocks,
Tata Motors and Hero MotoCorp are likely to be the
best performers, followed by Bajaj Auto.
􀂁 Valuations and recommendations: We continue to
remain positive on Bajaj Auto in the 2W space and on
Mahindra & Mahindra and Maruti in the 4W space. We
maintain our Hold rating on Hero MotoCorp and Tata
Motors and maintain Sell on Ashok Leyland.

Oil & Gas: Uncertainties persist yet stocks look attractive :Centrum

Please Share:: Bookmark and Share India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Uncertainties persist yet stocks look
attractive
Higher crude prices are taking the under-recoveries
through the roof. At US$120/bbl and rupee-dollar
exchange rate of Rs50/US$, under-recoveries are
expected to shoot up past Rs2tn (without any price
hikes). We believe cash payments (subsidies) to the
OMCs would stress the government which would be in
excess of Rs1tn. Simultaneously, the collection from the
sector through duties, cess etc. is expected to be under
Rs1tn. Hence, we believe that the government will have
to resort to retail fuel price hikes thus supporting the
OMCs and upstream companies. Periodic price hikes
will reduce under-recoveries and relieve the stress on
the government as well as upstream players. We thus
maintain our positive stance on OMCs (BPCL, HPCL and
IOC), GAIL and upgrade the upstream companies (OIL
and ONGC) to ‘Buy’.
􀂁 Crude price assumption for FY13E raised to
US$120/bbl: Embargo on Iranian crude has led to a
spike in crude prices which we believe will sustain in
FY13E. Without any near term solution to the Iranian
issue, we do not foresee softening of oil prices. Hence,
we have raised our crude price assumption from
US$104/bbl earlier to US$120/bbl for FY13E and for
FY14E from US$100/bbl earlier to US$110/bbl.
􀂁 Under-recoveries to remain high at about Rs1.8tn
in FY13E: With high crude prices and average
exchange rate of Rs50/US$, under-recoveries are
expected to be about Rs1.8tn in FY13E taking into
account Rs3/lit and Rs25/cylinder hike in diesel and
domestic LPG prices respectively. Petrol price
changes are expected to happen periodically given the
high under-recoveries on petrol.
􀂁 Collection for the central government to remain
stagnant: We believe a significant part of the
collection from the oil and gas sector (customs,
excise, cess etc.) would be utilised for financing
under-recoveries by the government in FY12E.
Ironically, due to high crude prices collections would
be lower than the subsidy payments of the
government (about Rs1.1tn) during FY13E. Hence,
the government will have to resort to retail fuel price
hikes to reduce its burden.

Shipping & Offshore Services: Q4FY12 Results Preview : Centrum

Please Share:: Bookmark and Share India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Close to bottom; but long way to recovery
Indian shipping companies continue to reel under the
global supply glut which has kept the day rates under
pressure. The net profit for Great Eastern Shipping (GE
Shipping) is expected to be down 45.5% YoY to
Rs526mn. Aban Offshore’s net profit is estimated to
decline 74.3% YoY to Rs621mn. Shipping Corp of India
(SCI) is likely to report losses of Rs520mn vs. loss of
Rs62mn last year. Though the freight rates have reached
historical lows, a recovery in shipping cycle is still far
away as new vessel deliveries would continue to depress
freight rates during 2012. We believe that though the
Indian shipping companies are well diversified, they will
remain impacted by the current downtrend at least in
the near term of one year.
􀂁 Bunker costs remains high; up 23% YoY; container
and spot charter segment to remain impacted: Price
of bunker oil (fuel for shipping vessels) increased to
record levels of $732 per barrel during Q4FY12 vs.
$598/bbl last year. SCI, which is present in the container
liner segment, would be impacted the most. Its bunker
costs increased 93% in Q3FY12, is likely to go up by 56%
in Q4 to Rs3.8bn leading to a 107bp decline in operating
margins to 10.6%.
􀂁 Offshore oil services (drilling) industry too remains
under pressure: The offshore drilling industry
continued to remain under pressure during Q4FY12.
According to Rigzone.com, the global rig utilisation rate
remained at a low of 78.4%, although it improved from
77.9% last year. Offshore rig day rates remained stable,
while jack-up market continued to face pricing
pressures. Utilisation of jack-up was at 77% vs. 76%
recorded last year. Demand for deepwater rigs was
strong globally, as fleet utilisation for Semi-subs
improved to 83.7% vs. 81.7% last year.
􀂁 Top Pick: GE Shipping (Buy with TP of Rs308): We
believe GE Shipping is better placed compared to peers
due to its diversified presence in the offshore segment
and strong under-leveraged balance sheet which is
likely to help it take advantage of the current downturn
and increase fleet at lower costs. Further, it is expanding
only in the offshore segment giving its better visibility
and higher profitability
􀂁 Sell on SCI and Aban: We have a negative stance on
pure play shipping company SCI with a target of Rs60.
We also maintain Sell on Aban Offshore as concerns
persist with three of its assets idle and others coming for
re-negotiations at the bottom of the day-rate cycle,
over-leveraged balance sheet and high exposure in Iran.

BSE, Bulk deals, 13/4/2012

Please Share:: Bookmark and Share India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Deal DateScrip CodeCompanyClient NameDeal Type *QuantityPrice **
13/4/2012590122Ashika Credit CapWITHAL COMMERCIAL PVT LTDS9403062.66
13/4/2012512149Avance TechETHAN CONSTRUCTIONS PRIVATE LIMITEDS65554160.29
13/4/2012531194Brahmaputra InfraSURESH KUMAR PRITHANIS10520049.22
13/4/2012531270Dazzel ConfYOGESHKUMAR SURESHBHAI PARMARB7770212.88

NSE, Bulk deals, 13-Apr-2012

Please Share:: Bookmark and Share India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


DateSymbolSecurity NameClient NameBuy / SellQuantity TradedTrade Price /
Wght. Avg.
Price
Remarks
13-Apr-2012HARRMALAYAHarrisons Malayalam LtdCARNIWAL INVESTMENTS LIMITEDBUY3,00,00075.31-
13-Apr-2012HARRMALAYAHarrisons Malayalam LtdUNIVERSAL INDUSTRIAL FUND LIMITEDSELL3,00,00075.29-
13-Apr-2012IVRCLINFRAIVRCL LimitedMERRILL LYNCH CAPITAL MARKETS ESPANA S.A. SVBBUY16,00,00073.97-
13-Apr-2012KFAKingfisher Airlines Ltd.TRANSGLOBAL SECURITIES LTD.BUY70,58,65019.91-
13-Apr-2012KFAKingfisher Airlines Ltd.TRANSGLOBAL SECURITIES LTD.SELL70,58,63919.91-
13-Apr-2012PDUMJEPULPPudumjee Pulp & PaperHALAN PROPERTIES PRIVATE LIMITEDBUY8,00,00019.07-
13-Apr-2012PDUMJEPULPPudumjee Pulp & PaperSARAF SUNITA SARWANKUMARSELL3,00,00019.50-

Metals – Ferrous & Mining: Q4FY12 Result Preview : Centrum

Please Share:: Bookmark and Share India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Sequential improvement on lower costs
and higher volumes
Higher volumes on account of seasonal improvement in
demand, improved realizations on a sequential basis
and lower raw material costs (particularly for steel
producers) are expected to result in a sequential
improvement in profitability for metal companies in our
universe during Q4FY12. We see the earnings
improvement in Q4FY12 to be more seasonal in nature
rather than structural and still remain concerned on the
low demand-high supply dynamics in the global metals
space. We maintain our cautious stance on the ferrous
space but remain positive on the mining space on
account of attractive valuations and low costs.
􀂁 Sales volume to improve sequentially: We expect volumes
to show sequential improvement on the back of higher
seasonal demand. Steel players are expected to show volume
growth with SAIL and JSW steel showing sequentially higher
sales. Among base metal players, HZL will see increase in lead
and silver volumes.
􀂁 Realizations remain firm: Global base metal and steel prices
improved during the quarter and with rupee remaining weak,
we expect domestic realizations to remain firm on a sequential
basis and result in sequential revenue growth. Mining players
are expected to suffer a drop in realizations on a QoQ basis
due to drop in global prices.
􀂁 Margins to remain weak despite sequential improvement:
Margins are expected to improve by 100-300 bps QoQ for
metal players in our universe but still remain weak on an
overall basis and lower YoY as the recovery in demand
remains slow.
􀂁 Profits to remain subdued: We expect pressure on PAT due
to higher interest costs and expect only marginal recovery in
MTM forex losses of previous quarters as rupee has remained
weak overall. We expect sequential improvement in PAT from
all companies under our universe except NMDC which has
suffered due to lower volumes in Q4FY12E.
􀂁 Maintain cautious view on the ferrous space: We remain
Cautious on the domestic ferrous space amidst tough
operational environment and subdued global steel prices
going ahead due to higher supplies. We also expect raw
material prices to spike yet again going ahead. We maintain
buy on mining stocks like NMDC and HZL on attractive
valuations and volume growth. We remain neutral on Sterlite
Industries due to concern over the proposed merger with Sesa
Goa. We maintain sell on Tata Steel and SAIL.

FII DERIVATIVES STATISTICS FOR 13-Apr-2012

Please Share:: Bookmark and Share India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


FII DERIVATIVES STATISTICS FOR 13-Apr-2012 
 BUYSELLOPEN INTEREST AT THE END OF THE DAY 
 No. of contractsAmt in CroresNo. of contractsAmt in CroresNo. of contractsAmt in Crores 
INDEX FUTURES786652053.25706931838.753748049631.36214.50
INDEX OPTIONS74735519594.9470655318520.21142411737078.771074.73
STOCK FUTURES662981929.63706362034.3882185822899.49-104.74
STOCK OPTIONS514051484.12526271509.75412281115.34-25.63
      Total1158.86


-- 

Q4FY12 Results Preview Pharma Excellent overall growth :: Centrum

Please Share:: Bookmark and Share India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� �


Q4FY12 Results Preview

Pharma

Excellent overall growth
We expect the thirteen pharma companies under our coverage to post 29%YoY growth in sales during the quarter due to FTF opportunities of generic Lipitor and Zyprexa in the US market. Ranbaxy Labs (RLL) is expected to report 76%YoY growth in revenues from generic Lipitor in the US. Pharma companies with higher exports are likely to lose due to the 4.3%QoQ appreciation of rupee against the dollar. However, they would benefit from MTM forex gains. We expect these companies to report 54%YoY growth in EBIDTA and 400bps improvement in EBIDTA margin from 20.6% to 24.6%. We expect 47%YoY improvement in net profit due to strong sales growth and margin improvement. Overall, we expect pharma companies to report excellent performance for the quarter.
m  Good revenue growth: We expect revenue growth of pharma companies at 29% on a YoY basis, on the back of good growth in the US market and benefit of forex gains from appreciation of rupee. We expect Dr. Reddy’s Labs (DRL) and RLL to benefit from FTF of generic olanzapine and Lipitor in the US respectively.
m   Sharp Improvement in EBITDA margin: We expect the EBITDA margin of our coverage companies to improve from 20.6% to 24.6% due to high margin FTF opportunities for generic Lipitor and olanzapine in the US market.
m  MTM gains due to currency fluctuations: We expect the companies to benefit from MTM gains due to 4.3% appreciation of rupee during the quarter. However, these companies would have lower revenue growth.
m  Lupin remains our preferred pick in the space: Lupin continues to be our best pick in the sector on account of improvement in its performance across geographies. The company is likely to report good growth in the domestic market, US, Europe and Japan. The launch of generic Seroquel and Geodon in the US would drive the growth.

Inflows into gold ETFs at 5-yr high.: Financial Express

Please Share:: Bookmark and Share India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Net inflows into gold exchange-traded funds (ETFs) for the financial year 2012 were the highest in the last five financial years as muted returns in most other asset classes and an uncertain outlook for the world economy prompted risk-averse investors to flock to the yellow metal.

Net inflows into gold ETFs for FY12 amounted to R3,646 crore, a 59% increase over the R2,289 crore garnered in the previous fiscal, data from industry body Amfi shows.

The figure is 43 times more than the amount collected in FY09, the year the global financial crisis shook world markets. Assets under management (AUM) for the category in FY12 have more than doubled over that in the previous fiscal, and multiplied more than 20 times in the past five years.

“Risk aversion among investors was pretty high for much of last year, which made them turn to gold, which is perceived as a safe haven,” said Nitin Rakesh, CEO, Motilal Oswal Asset Management Company. He added that the bull run in the yellow metal also made the yellow metal attractive: “Investors tend to flock to asset classes that are doing well.”

Gold ETFs as a category gave returns of about 34% for the financial year 2012, according to data compiled by Value Research. Gold prices appreciated as much as 35% in the period, touching R28,040 on the last day of the year.

Currently, a dozen gold ETFs are in operation.

According to Kishore Narne, senior VP and head —currency & commodity—Anand Rathi Securities, the psychological affinity Indians have towards gold made them invest in the commodity despite the sky-high prices.

“Gold has been the best performing asset over the past 10 years. It is a hedge against inflation, which has remained stubbornly high in the past two years,” said Mahendra Jajoo, CIO —fixed income— Pramerica Asset Managers.

Compared to gold, most other asset classes underperformed last year. For instance, industrial metal silver slipped 1%, while Indian equities as measured by the benchmark BSE Sensex slipped by more than 11% during the year. Debt fared better, with average category returns for FY12 clocking a little over 9%. According to market participants, Indian investors have grown more comfortable with investing in gold ETFs over the past two years.

This change in mindset, in turn, encouraged several fund houses to launch gold ETF products over this period. More specifically, inflows into this category last year were boosted by the launch of several gold fund of funds.

“At least 8-9 gold fund of funds were launched last year, which gave a significant boost to the assets under management of gold ETFs,” pointed out Rakesh.

Market participants believe that inflows into gold ETFs are likely to remain robust going forward unless the equity market starts outperforming. According to a recent statement by Thomson Reuters GFMS, one of the world’s leading economics consultancies in precious metals, the more-than-decade-long bull run in gold may come to end in early 2013 if prices touch new highs.

IIP for the month of February 2012. :Microsec

Please Share:: Bookmark and Share India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


IIP for the month of   February  2012.

Despite a lower base of last year, India's Industrial Output growth came in at 4.1 percent YoY in February, 2012, much lower than ours (6.4 percent) as well as consensus estimate (6.7 percent). However, the pace of expansion in Industrial Production was faster than a sharply revised 1.1 percent YoY growth in January 2012 against 6.8 percent YoY reported earlier. This major downward revision in January production growth was mainly on account of correction in the production data of sugar, which was wrongly taken at 13.41 million tonnes as compared to 5.81 million tonnes. As a result growth for Food Products and Beverages was revised sharply downward to 17 percent YoY against 92.6 percent YoY reported previously. Similarly, growth for Consumer Non-durables was revised downward to 11 percent YoY vis-à-vis 42.1 percent YoY reported earlier.

Oil & Gas: Crude traps sector and government likely to rescue in Q4FY12 :Centrum

Please Share:: Bookmark and Share India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Crude traps sector and government likely to
rescue in Q4FY12
Crude maintained its momentum with an average of
US$118.6/bbl (Brent) during Q4FY12 amidst rising
concerns over Iranian oil embargo by the EU. Crude has
now stabilised between US$120/bbl and US$125/bbl and
there seems to be no triggers for it to climb down in the
near term. GRMs demonstrated illusive recovery in the
month of January, yet took a beating in the month of
March and thus averaged lower QoQ albeit marginally at
US$7.7/bbl in Q4. Devoid of any price hikes in retail fuels
under-recoveries skyrocketed and is expected to be about
Rs448bn. We believe the government will rescue the
beleaguered OMCs with cash subsidies while the upstream
is likely to provide support despite hurting its own
profitability. Gas utilities are likely to report stable
performance amidst the crude turmoil.
􀂁 Crude averages at US$119/bbl: Amidst the Iranian oil
embargo by the EU, crude rose and averaged US$119/bbl
in Q4. Iranian production is expected to have declined by
about 300,000bpd thus putting pressure on supplies
although Libyan output has increased. Crude is not likely
to decline in the near term due to the Iranian issue.
􀂁 Illusive recovery in GRMs: Reuters Singapore Complex
GRMs which witnessed recovery in the month of January
declined in the month of February with further decline in
the month of March and averaged marginally lower QoQ
at US$7.7/bbl during Q4FY12.
􀂁 Under-recoveries scale higher at Rs448bn: Devoid of
price hikes in regulated fuels, under-recoveries scaled up
further to an estimated Rs448bn in Q4. However, the
OMCs are expected to be adequately compensated
through upstream subsidies and cash from the
government.
􀂁 Crude estimate and rupee-dollar exchange rate for
FY13E and FY14E revised: We have revised our crude
price assumption to US$120/bbl and US$110/bbl and
rupee-dollar exchange rate to Rs50/US$ to Rs48/US$ for
FY13E and FY14E respectively. Incorporating these
changes we have revised our estimates for RIL, Cairn,
Gujarat Gas, Petronet LNG and IGL with subsequent
changes in our target price and recommendation

Market Summary -13.04.2012 -Angel Broking - PDF link

Please Share:: Bookmark and Share India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��






Derivatives Report -13.04.2012 -Angel Broking - PDF link

Please Share:: Bookmark and Share India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��



 

Technical Report -13.04.2012 -Angel Broking - PDF link

Please Share:: Bookmark and Share India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��






 

Infy's FY13 EPS target at Rs 165-166: Nirmal Bang in Moneycontrol

Please Share:: Bookmark and Share India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Harit Shah, senior research analyst at Nirmal Bang Institutional Equities, tells CNBC-TV18 that Rs 165-166 is a more reasonable EPS target for Infosys in FY13. "Given the fact that they have taken an average of 50.88 as rupee rate for the year, they will definitely have to do that," he explained, adding that the lack of any salary hikes over the year will further help their margins.
According to him, the sharp fall in the stock today is due to the company's guidance for Q1, which is 0-1% revenue growth. "Coming on a very low base of the fourth quarter, this is something that is a fairly disconcerting factor for the market," he said.
Nirmal Bang currently doesn't have a positive rating on any of the IT stocks at this point. "But from a relative perspective, probably an HCL Tech or a Wipro would do little better than Infosys," said Shah.
Below is an edited transcript of his interview with Latha Venkatesh and Ekta Batra. Also watch the accompanying video.
Q: Are you going with the kind of EPS that Infosys management has guided, which is sizably below what the market was expecting, or do you think they would still deliver north of Rs 160?
A: Definitely they have to do that because if they are not able to achieve that in spite of a rupee tailwind, I think you will see a further derating of the stock. So in any case, I think that probably Rs 165 to Rs 166 would be slightly more reasonable target for FY13 EPS, especially given the fact that they have taken an average of 50.88 as rupee rate for the year. So that gives around 5-6% straight away you get a rupee tailwind on account of that factor.
Plus the fact that there is not likely to be any major salary hikes in the year will be a positive factor for the margin profile as well. So probably Rs 160-161 is slightly on the lower side.
I think the bigger picture is the fact that your guidance is so subdued especially for the first quarter, where you have guided just for 0-1% sequential dollar revenue growth and that too coming on a very low base of the fourth quarter. So this is something that is a fairly disconcerting factor that is a key negative factor that the market is looking at and that is reflected in the stock price movement today.
Q: What is your view with regards to what's going on in the industry and whether this is actually company specific problem?
A: I would like to look at this in two ways. As far as the Q4 numbers are concerned, I think it will be a fair point to say that this is not just a company specific issue. You will see that happening even in the other companies’ results when they are announcing their numbers later in the month. So you are going to see a weak fourth quarter because of client delays and these factors are likely to lead to fairly slow revenue growth.
The question here is if the kind of fairly subdued outlook for FY13 is going to be seen in the other IT firms. At this point, it's very difficult to make a call but we would probably go with the latter, that it’s more a company specific issue as far as FY13 is concerned. So I don't think a Wipro or an HCL Tech will make the same bearish commentary as what Infosys is making regards FY13.
Q: At Rs 165-166 EPS, what valuations will you give the company?
A: Rs 165-166 was just an approximate figure, we are still reworking our numbers at this point in time for the stock as far as FY13 is concerned. As far as valuations are concerned, one of the key reasons that historically the stock has commanded a premium multiple to the market is because of the predictability of its earnings. It's quite clear that for the last several quarters now that predictability has gone away now, it's becoming increasingly more difficult and volatile to predict their earnings.
So given this factor, it will be fair to say that there should be a bit of a derating as far as the multiple that you should award the stock is concerned. So at this point we will probably go may be with a maximum of a 15 times multiple to Infosys.
Q: What exactly would be your pecking order within the frontline IT space post Infosys? Also, do you think Infosys actually has lost that poster boy reputation that it used to have?
A: From an absolute returns perspective, at this point we won't have any buy ratings on any of the IT stocks. We had initially a buy rating on HCL Tech, but that stock has also run up by about 20% since that, so at this point we don’t really have any positive ratings on any of the IT stocks.
May be from a relative perspective, probably an HCL Tech or a Wipro would do little better than Infosys but from an absolute rating perspective we don’t have any buys right now.
Q: Anything we missed out from the management meet that you want to highlight at all?
A: No they have been cautious for a while now for the last several quarters, they have repeatedly maintained that cautious stance and this time around it seems to have become even more cautious. There are talks that they had the highest amount of client addition in this particular quarter and apparently even from our talks with other IT firms you can clearly gauge that probably clients have more or less finalized their budgets by the end of March.
Having said that, that should therefore reflect in your guidance for the first quarter. Unfortunately Infosys hasn’t quite done that. Their guidance of 0-1% is a pretty subdued guidance and that is something which is one of the few factors that is concerning the markets at this stage.