CP | Dalal Street

Market Expectations from Infosys

March 27, 20101 min read

The guessing game begins as volume growth and dollar revenue to remain strong in Q4 FY10, boosted by the ongoing IT budget recovery. Analysts expect Tier I vendors to report 5-5.4% dollar revenue growth, backed by similar growth in volumes.

Infosys guidance for rupee EPS is likely to be 117-120, implying YoY growth of 6.6-9.4%. Expect dollar revenue guidance at 15-18% and rupee revenue guidance at 12-15%. This could disappoint investors who are pricing in 18-20% EPS growth, as indicated by valuations at 22.7x FY11E. We believe Infosys EPS guidance needs to come in at (more…)

Economy, Markets and Macro Views

Corporate Free Cash Flow Positive – The Big Turn?

March 26, 20101 min read

The tide has almost completed its turn on India: growth is well and truly back, cash (market flows) is coming, and corporates are beginning to turn in cash.

India’s high-investment-growth phase has been fuelled/dependent on capital markets, in part given its FCF-negative status in recent years. As India Inc turns FCF- positive, could this change? There are caveats – growth lies outside top corporates/SPVs, so not captured by estimates; fiscal deficit is divestment-dependent; corporate capex is still subdued, but could rise with confidence /capital
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Equity Research

Camson Bio Technologies – Potential Multibagger ?

March 26, 20102 min read

Camson Bio Technologies is India’s first wholly integrated agriculture biotechnology company. Camson has a first mover advantage in certain product categories. Its future growth will depend on its ability to leverage the growth potential in replacing the chemical pesticides using the residue free platform.

Camson is all set to leverage all the hard work put in over the last one and half decade. A typical biocide research takes 9 – 12 (more…)

Equity Research

Cairn India’s Rajasthan resources upgraded

March 25, 20102 min read

Cairn India (CIL) today increased its discovered Rajasthan resource base from 3.7 bn boe to 4.0 bn boe. While the 2.1 bn boe Fatehgarh formation (MBA fields) estimates have not been changed, estimates in 22 other fields (Barmer Hill formation) have been upgraded to 1.9 bn boe (1.71 bn boe earlier).

While the higher resource base is directionally positive, it requires significant work to establish new reserves in an increasingly (more…)

Equity Research

Educomp Solutions – Smart Class – Strong pipeline

March 23, 20102 min read

Educomp team is well placed to meet strong demand for Smart Class implementation. Educomp’s guidance of implementing Smart Class in 2500 (FY11) schools implies installing hardware in ~50 schools per week. As EduSmart outsource nearly 50% of low end installation work to local vendors and given its ability to manage hardware installation at multiple schools concurrently, we believe the current team of 70 technicians can manage installations in nearly 80 schools per week. See minimal risk to implementation in FY11e.

The initial response to Educomp & EduSmart Smart Class advertisement has been extremely strong with school signs up exceeding (more…)

Breaking Corporate India Earnings News

Impact of Additional 4 mtpa of LNG from Qatar

March 23, 20101 min read

Qatar oil ministry has agreed to supply additional 4 mtpa of LNG to India by 2013E. The supply is expected to be ramped up from 0.3 mtpa in CY2010E to 4 mtpa in CY2013E; this is in addition to the current supply of 7.5 mn tons of LNG to India. The petroleum
ministry has stated that a share of the additional LNG from Qatar will go to Petronet LNG and RGPPL’s yet-to-be-commissioned 5 mtpa LNG Dabhol terminal.

Linking of LNG price to crude oil may be negative for LNG importing companies given (1) speculation-driven volatility in crude oil prices (more…)

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