Category: Equity Research

Micro Irrigation (MIS) growth continues to remain robust driven by strong demand and its current under-penetration as a percentage of total irrigated area in India. With central government focus on improving agriculture productivity, increasing number of state government driving MIS programs and geographical expansion by Jain Irrigation – JISL. (more…)

Merill Lynch [ML] in a report has retained a Sell on Sasken despite strong Q4 given likely risk to FY09 guidance as macro environment amongst two of its segments – semiconductor and telecom OEMs (62% revs) – remains challenging and we see downside risk to management’s margin target of 300-500bps improvement in margins.

4Q revenues grew by 11% qoq, 7% ahead of MLe, driven by robust 103% yoy growth in product business. EBITDA margins improved by 772bps driven by 318bps improvement in services margins and 38% EBITDA margins in product business. (more…)

Morgan Stanley [MS] just a while ago has downgraded Tata Consultancy Services to Equal-Weight. While Credit Suisse already maintains a Neutral rating on the same.

Lower profitability of large deals and slower than expected ramp-ups could affect profitability over the coming quarter, in MS’s view. (more…)

Tata Chemicals:TCL’s fertilizer business, which comprises urea (32% of fertilizer revenues) and complex fertilizers (68%), should benefit from favourable policy pronouncements. The latest $1 bn acquisition of a 100% stake in GCIP at 2.4x EV/Sales and 7.6x EV/Ebitda is definitely much more competitive than its earlier acquisition of Brunner Mond at similar valuations. Spot prices of Phosphoric acid are hovering around $1400/Mt against IMACID’s contracted price of $566/Mt, which are due for renewal later this month. The profits for IMACID to rise by 30% & 22% in FY09E and FY10E mainly led by firm prices and increase in capacity from 0.36 Mtpa to 0.45 Mtpa. Led by firm soda ash prices and repaying of high cost debt, we expect adjusted profits for BMGL to rise by 57% and 35% in FY09E and FY10E. (more…)

Wipro’s results for Q4FY08 were in line with expectations. Global IT services & products revenues grew 6% in INR terms. This was mostly volume-led.EBIDTA margins in the global IT business were lower predominantly due to on-site salary hikes. The management has re-iterated continuing traction with marginal impact of the US sub-prime issue, as yet. This indicates flat to marginally higher client budgets but increasing traction and preference for offshoring. (more…)

Revenues grew 8% Q/Q in US$ terms with a 4.6% Q/Q increase in EBITDA margins from a low base in 3Q FY08. However, Aztecsoft reported a foreign exchange loss of Rs42MM during the quarter leading to net profit of Rs32MM, below our expectations.

Management indicated a 25-28% Y/Y US$ revenue growth in FY09 led by a strong rampup in newly added clients. JP Morgan revenue estimates in line with management guidance, and now expect a 25% revenue CAGR over FY08-FY10E as against 30% earlier. (more…)