Dalal Street

As the global economic slowdown has ripped countries indiscriminately, India’s revenue growth from outsourcing is slowing significantly after years of bagging double-digit growth. Companies have slashed their IT budgets and consumers will need a lot more persuasion before they can feel confident enough to loosen purse strings, according to a forecast by Gartner Consultancy. The report has also added that the full impact of the global recession on the IT services and telecommunications sectors is still emerging.

National Association of Software and Service Companies (Nasscom) has projected the sector’s export revenues will rise by just 4-7% this year to at most $50 billion. The Indian IT space is sailing through tougher times for the flagship outsourcing industry, whose skilled and low-cost workforce have put the country on the global map.

The growth rate at 4-7% for the fiscal is much lower than the 16% logged in the last financial year to March and the 30% rise the industry clocked annually for most of the decade.

The global economic downturn has made companies reluctant to authorise new spending for maintaining their growth.

The board of directors of Borax Morarji has decided to issue of rights equity shares in the ratio of 1 (one) equity share of Rs 10 each at a premium of Rs 10 per share for every existing share held as on record date together with 1 (one) Detachable Warrant for every 2 (two) right shares allotted which will entitle the holder of the Detachable Warrant, upon conversion, 1 (one) equity shares of Rs 10 at a premium of Rs 10 per share.

DLF revenues of Rs17.46bn and earnings of Rs3.96bn were down 55% YoY and 79% YoY respectively. EBITDA margins of 45% surprised, despite the fall in revenues; would await more details on this. The company has also announced dividend of Rs2/share for FY09.

Construction activity has picked up, now 42msf under contrs (vs. 36.5msf in 4Q), particularly resi projects; also delivered 1msf of off/comm. space. Pre-sold ~2.5msf in the qtr – Delhi, Capital Greens (2msf); and Bangalore (0.5msf); Total developable area down to 423msf (vs. 425msf earlier due to sale of few projects/land. De-notified 5-SEZs as commercial / IT space demand still muted – though pick-up in enquiries.

DAL outstanding recd to the tune of Rs25bn in the qtr (vs. target Rs20bn), this has lowered receivable to Rs26bn (vs. Rs49bn as of Mar 09), expects another Rs5bn during FY10.

Better than expected qtr though sustaining these margins going forward appear difficult. Operationally, improved construction activity and reducing DAL receivables and debt are positive signs.