2012 | Dalal Street

India Loses Sheen with Foreign Investors + High Inflation Lower GDP Growth FY2013 – Deepak Parekh

April 22, 2012April 22, 20125 min read

HDFC Group Super Chairman, Mr. Deepak Parkeh last week met Large / Mega Foreign Investors at Singapore and in an interview with CNBC TV-18 discusses the state of Indian Economy. Here are the most important points Mr. Parkeh touched upon.

Inflation / Subsidies:Inflation is not under control and RBI kind of swallowed a bitter Pill on cutting the repo / reverse repo rate by 50 bps. Food Inflation is still very High. Fuel [Petrol, Diesel, LPG] and Fertilizer subsidies has gone through the roof. A Marginal increase in Rail fare was rolled back. India’s Subsidy bill is going to increase, increase and increase. Who will fund the Gap ?

Deposits / Loans:Deposit Growth has been lowest in the last few years. (more…)

Equity Research

HCL Technologies on a Roll + Robust Deals – Re-Rating ?

April 21, 20122 min read

HCL Technologies is the Second Best IT Stock on Dalal Street after TCS in the last 4 years. It has registered among the strongest growth in the sector over the past year or so and its relatively low-margin base also provides some cushion. The company reported consolidated revenue up by 2.5% qoq to US$1.05bn led by IMS (+5%) and BPO (+6%); software services grew a slower 1.5%. EBITDA margin at 18% (-13bp qoq). PAT up 5% qoq to Rs5.8bn.

This set of numbers should assuage some (more…)

Breaking Corporate India Earnings News

CLSA Questions Infosys – The Worst Performing IT Stock in 4 Years

April 21, 2012April 21, 20122 min read

Sr. Technology Analyst Mr. Nimish Joshi of CLSA has written an Open Letter to Infosys CEO, Mr Shibulal. Open Letters are normally written when their is arrogance or refusal to accept by one party, as was the case between Dr Manmohan Singh and his Economic Adviser Dr Raghu Rajan.

In this case, we are not sure why Mr. Joshi chose this medium. He begins by saying that Infosys has been the worst performing IT stock in the last 4 years with mere returns of 54% compared to 137% by TCS. Further, Mr. Joshi raises 3 issues,

Loss of revenue and EBIT market share – Revenue Market Share has dropped 350 bps in the last 5 years. Infosys investors are worried about the adverse impact Infosys’ current (more…)

Economy, Markets and Macro Views

UBS Downgrades India to Neutral – Overweight on China & Korea

April 20, 2012April 20, 20121 min read

Since the the beginning of 2012, India and China dominated performance in Asia. UBS stepping in the shoes of a Bull in India, thought by the end of February that this market was too advanced, particularly in light of the UP and Other election, budget and seasonal tightness in liquidity. Since mid February, India has given up most of its relative gains for the year, China is now under-performing. (more…)

Equity Research

HDFC Bank Sailing Smooth as Ever – Rating Must be Higher than Sovereign Rating

April 20, 20122 min read

This is one Company and Group [HDFC] which is very cautiously managed yet Grows above its Sectoral Average and Deserves a Rating Higher than Government of India’s Sovereign Rating. No Kidding!

HDFC Bank reported 4Q earnings of Rs14.5bn, up +30% yoy led by topline and lower provisions, as asset quality continues to remain comfortable. Topline grew +19% yoy driven by 22% loan growth and margins holding-up at 4.2% yoy on rising share of retail loans. CASA remains high at 48.4%. Core fee income grew +24% yoy, ~85% from retail. (more…)

Equity Research

MindTree – Impressive Margins in FY2012 – Sustainable ? Differing Valuations

April 19, 20123 min read

MindTree reported modest results for 4QFY2012, with OPM and PAT coming in ahead of expectations. The company reported a 4.9% qoq increase in volumes. MindTree reported revenues of US$105m (+1.3% qoq, +22% yoy). EBIT margins surprised positively and improved to 15.5% (+161bps qoq, +895bps yoy). Net income grew to Rs689m (+14% qoq, +115% yoy).

Management Outlook: While the recent weeks saw deterioration in the spending environment and management expects lacklustre growth for 1HFY13, it (more…)

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