25 October 2017

Infosys Q2 profit rises 7%, declared an interim dividend of Rs 13.

  14:27      Admin



Software firm Infosys said profit for July-September quarter grew by 7 percent sequentially to Rs 3,726 crore, but slashed its full year constant currency revenue growth guidance to 5.5-6.5 percent.

Revenue during the quarter increased by 2.9 percent to Rs 17,567 crore and dollar revenue grew by 2.9 percent at Rs 2,728 crore compared with previous quarter, missing analysts' expectations.

Revenue growth in constant currency terms was 2.2 percent for the quarter.

The country's second largest IT services provider reduced its full year constant currency revenue guidance to 5.5-6.5 percent from 6.5-8.5 percent earlier, which was on expected lines.

The company has retained its full year operating margin guidance at 23-25 percent and expects revenue growth at 3-4 percent in rupee terms.

Also read - Panaya deal given clean chit, could have better handled severance pay issue: Infy Board

"During the quarter, we responded quickly to the management and Board changes through proactive communication with all stakeholders minimizing any negative impact to the business and allowing us to deliver growth across all our large industry units," UB Pravin Rao, Interim CEO and Managing Director said.

The Street has been eagerly waiting for the announcement of new CEO, after Vishal Sikka resigned as CEO & MD in August. The company appointed UB Pravin Rao as interim CEO and MD while co-founder Nandan Nilekani became non-executive chairman in August.

"The process of identifying the next CEO and shareholder consultation outreach have been initiated and are progressing well," Infosys said.

It was mixed set of numbers as profit and operational earnings beat analysts' expectations but revenue missed estimates.

Profit was estimated at Rs 3,496 crore while rupee revenue was expected at Rs 17,630 crore (3.2 percent growth QoQ) and dollar revenue at USD 2,738 million (3.3 percent) for the quarter, according to average of estimates of analysts polled by CNBC-TV18.

EBIT (earnings before interest and tax) stood at Rs 4,246 crore (up 3.3 percent QoQ) and margin at 24.2 percent (up 10 bps QoQ) for the quarter against CNBC-TV18 poll estimates of Rs 4,097 crore and 23.6 percent, respectively.

“Focus on improving operational efficiencies enabled us to deliver stable margins in the quarter and at the same time provide compensation increases and higher variable payouts to employees," MD Ranganath, CFO said.

The bottomline was supported by other income (that increased 8.5 percent QoQ) and lower selling & marketing expenses (down 4.7 percent) in Q2.

The software firm has added 72 clients (gross basis) during the quarter and active clients were at 1,173 at the end of September 2017, increased from 1,164 in June 2017.

It has added 1 client in USD 100 million category, 3 in USD 25 million band, 7 in USD 5 million and 14 clients in USD 1 million category.

The standalone attrition rate increased to 17.2 percent in Q2FY18, from 16.9 percent in previous quarter and consolidated attrition rate also inched up to 21.4 percent from 21 percent.

The utilisation including trainees improved to 81.8 percent (against 80.2 percent QoQ) and the same excluding trainees was at all-time high of 84.7 percent (against 84 percent QoQ) in July-September quarter.

Infosys has declared an interim dividend of Rs 13 per equity share.

Meanwhile, Infosys said after careful consideration led by the Chairman, the board reaffirmed the previous findings of external investigations that there is no merit to the allegations of wrongdoing.

The Chairman has conducted a review of all the external investigations into certain anonymous complaints the company had previously received. The review covered a range of matters, including the acquisition of Panaya which was completed by the company in February 2015 and the severance payments to the former CFO.

Source: Moneycontrol.com

Warren Buffett made Rs 2.2 lakh crore in past five years, net worth rises to an all time high.

  14:16      Admin

The legendary American investor Warren Buffett’s total wealth has risen to an all-time high at USD 81.5 billion (Rs 5.3 lakh crore), according to the Bloomberg Billionaires Index.

That puts the Berkshire Hathaway chairman into the third spot in the richest individual’s list, right after Microsoft’s founder Bill Gates and Amazon CEO Jeff Bezos.

The net worth of the Oracle from Omaha is equal to the per capita income (PPP) of 1.25 crore Indians or the whole population of Jammu and Kashmir (2011 Census).

What is even more interesting is the staggering pace at which his net worth has grown. In the last five years, his wealth has risen by USD 35 billion (Rs 2.28 lakh crore). That translates into USD 7.01 billion (Rs 45,684 crore) per year.



At a micro level, this would mean that the 87-year-old earned USD 13,333 per month (Rs 8.68 lakh) or USD 222 (Rs 14,467) per second.

(USD 1= Rs 65.17)

Source: Moneycontrol.com

24 October 2017

Govt announces Rs 2.11 lakh cr recapitalisation for public sector banks.

  14:33      Admin

The government today announced a Rs 2.11 lakh crore recapitalisation plan for public sector banks spread over two years in a bid to shore up their finances, boost private investment and revive the economy.

At a press conference held by Finance Minister Arun Jaitley, Banking Secretary Rajiv Kumar said the government will infuse Rs 1.35 lakh crore through recapitalisation bonds and Rs 76,000 crore through budgetary support and market raising.

The move comes following a 2015 announcement in which the government had sanctioned a Rs 70,000-crore capital infusion under the Indradhanush banking reform scheme, 80 percent of which has already been paid out, and which was dismissed by analysts as being too little.

The FM said the remaining Rs 18,000 crore that is remaining to be paid out under Indradhanush will be included as part of the Rs 76,000-crore infusion while banks will have to raise the rest Rs 58,000 crore through share sales.

India's public sector banks have been saddled with a gargantuan problem of bad debt, with overall gross non-performing assets to the tune of Rs 8.5 lakh crore hobbling credit growth and weighing on private sector investment.

Jaitley said that banks lent "indiscriminately" between 2008 and 2014, when gross advances increased Rs 34 lakh crore. A "large part" of this indiscriminate lending has now turned as non-performing assets (NPAs), he added.

Analysts say PSBs need capital infusion to the tune of Rs 5 lakh crore in order to fall in line with Basel III norms, which are slated to kick in in March 2019, and support growth.

At the press conference, FM Jaitley said the capital infusion will also be supplement with banking reforms, and outlined steps that the government has already taken in that direction, such as introducing the insolvency code, strengthening the SARFAESI Act and merging SBI with its subsidiaries, among others.

Secretary Kumar said banks are ready for a take-off due to strong economic fundamentals and push to public investment in infrastructure and strengthening the country's banking system will result in more jobs, growth and investments.

The FM, however, was noncommittal on whether any borrowing will impact the government's fiscal deficit target, adding that it would depend on the accounting treatment the government chooses to adopt. "The government will decide on this and announce it in due course," he said.

Arvind Subramanian, the Chief Economic Advisor to the Government of India, present at the conference said, "Recap bonds count towards debt but would depend on who is issuing it, government or banks? Under our own accounting practices, it is above the fiscal deficit line."

Former RBI Governor Usha Thorat told CNBC-TV18 that regardless of whether or not it is included in the deficit, the move wouldn't necessarily rile global rating agencies and added that the infusion would move the needle by way of repairing bank balance sheets.

But Leo Puri, MD of UTI AMC, said the government should impose conditionalities while infusing capital into banks by getting them to tighten lending standards and improve governance standards.

Source: Moneycontrol.com

10 October 2017

10 stocks which can turn multibaggers in 2-3 years

  15:58      Admin


If you have started investing in Indian stocks in January 2017, chances are you are sitting on huge pile of profits. The S&P BSE Sensex rallied nearly 20 percent and many small and midcap stocks gave multibagger returns in the same period.

The Sensex is currently trading at 18.8x of its FY2019 earnings which is an 8 percent premium to its 10-year average PE of 17.4x. Analysts suggest as interest rates are likely to remain lower, equities will stay attractive asset class and domestic inflows will be supportive of liquidity and valuations.

Investors’ can continue with their bottom-up stock picking approach and select stocks which can benefit from affordable housing scheme, consumption pick-up, banking, etc.

"The year 2017 has been a solid year for equities globally and India is no different. 2017 has also heralded an era of immense liquidity driven by the solid growth in domestic asset management industry. This liquidity has made parts of broader markets expensive with earnings not commensurate with the price action," Arbind Maheswari, Head of India Equities - Sales Trading, Bank of America Merrill Lynch told Moneycontrol
We have collated a list of ten stocks which could turn out to be multibaggers in the next 2-3 years:

Analyst: Hemang Jani, Head, Advisory, Sharekhan

Hindustan Unilever

In Q1FY2018, Hindustan Unilever Limited’s (HUL) revenue and PAT grew by 5 percent on a YoY basis and 15 percent on a YoY basis, respectively, beating Street’s expectations for the quarter.

Sharekhan has already revised their earnings estimates upwards for FY18 and FY19 by 2 percent and 3 percent, respectively, to factor in better-than-expected operating performance.

The company is banking on operating efficiencies through various initiatives and cost-saving activities at the supply-chain/distribution level to see a gradual improvement in OPM.

Petronet LNG

Rebound in LNG imports and shutdown of Dabhol LNG terminal during the monsoon to improve PLNG’s Dahej terminal utilization in Q2FY18. Sharekhan expects PLNG to be a key beneficiary of the rising share of LNG imports in India’s overall gas consumption due to the following factors:

1) Flat to a marginal increase in the domestic gas production outlook over FY18E-FY20E and, 2) Low competition in LNG market as only two new LNG terminals - 5mmt Mundra terminal and 5mmt Ennore terminal is expected to come on-stream over FY18E-FY20E.

The stock is trading at an attractive valuation of 14.9x FY19E EPS given the strong earnings growth outlook (15 percent CAGR over FY17-2019E) and resilient RoE of 22-23 percent.

Maruti Suzuki

Maruti Suzuki India (Maruti) is India’s largest passenger vehicle (PV) manufacturer with a strong 47 percent market share. Over the past two years, the company has been able to gain market share due to new product launches, a vast distribution network (with an increased focus on rural markets) and a shift in consumer preference to petrol models from diesel models.

Maruti has successfully established itself in the big car category (Ciaz, Vitara Brezza, Dzire, and Baleno), led by strong product features and success of its premium distribution network Nexa, which offers a unique buying experience. Maruti continues to remain our top bet in the automotive space, given the sustained trend of outpacing the PV industry’s growth.

Reliance Industries

Sharekhan expects Reliance Industries' (RIL) GRM to remain strong at USD 11.5/12.0 per bbl in FY18/FY19, given the robust global oil demand growth outlook for 2017 at 1.5mbpd (International Energy Agency estimate).

Moreover, a likely improvement in diesel cracks would help RIL to maintain a premium of USD 4bbl-5/ bbl over Singapore Complex GRM. Ethylene margin is also expected to remain firm at USD 600-650/mt, led by healthy demand and likely delay in the commissioning of incremental capacities in CY2018.

It expects EBITDA/PAT CAGR of 23 percent/12 percent over FY17-FY19, driven by the commissioning of core downstream projects in FY18. Any positive surprise in terms of better-than-expected financials of the telecom business would be an important re-rating trigger for RIL going forward.

NBCC

Sharekhan marginally tweaked its earnings estimates on account of strong order inflow guidance and margin expansion despite flat topline in Q1. NBCC is likely to deliver an earningss CAGR of 51 percent during FY17-FY19E.

The positive outlook on revenue guidance for the next two years is on account of revenue booking to kick-start from large projects of Nauroji Nagar, Netaji Nagar, and Sarojini Nagar. It is backed by strong earnings visibility, a lean balance sheet, high return ratios and its quasi-monopoly position.

Analyst: Vinod Nair, Head of Research at Geojit Financial Services

Bharat Electronics

BEL will emerge as a key beneficiary from the on-going defence modernisation programmes & GoI focus on indigenisation. The current order backlog of Rs 40,000 crore is 5.3x FY17 sales, which has significantly improved the earnings outlook.

We factor order book to grow at 15 percent CAGR; consequently, earnings are expected to grow by 14 percent CAGR over FY17-FY19E. We value BEL at P/E of 22x on FY19E on improved order inflow outlook.

Symphony

Symphony is the largest air cooler manufacturer with a market share of ~50 percent in the organised market in India. Led by strong R&D, launched more than 40 new products in the last six years.

Its asset-light business model has enabled the company to sustain its EBITDA margin level above 20 percent and ROCE above 40 percent over the years. Introduction of a new premium range of air coolers will prove to be margin-accretive in the long run.

We expect earnings to grow at 22 percent CAGR over FY17-19E led by volume growth.

Mahindra CIE Automotive

Diversified product portfolio, broad-based customer profile and strong geographical presence establish MCIE a preferred choice for the OEMs. Scaling up the new product line to drive growth in two-wheeler business will paint a positive outlook for the company.

We expect EBITDA margin to improve by 350 bps over CY16-18E led by cost control initiatives and capitalizing the OEM mix. Consolidated Revenue/PAT to grow at 14 percent/57 percent CAGR over CY16-18E led by an increase in order book from OEMs & recent acquisition (BFPL).

TCI

Transport Corporation of India (TCI) is one of the largest well-integrated players in the organised logistics industry providing freight, supply chain, warehousing solutions & shipping services. Has a fleet of 9000 trucks, 5 ships & 11mn sq ft of warehousing space.

TCI will emerge as a key beneficiary from the implementation of GST, which is expected to boost third-party logistic players (3PL) business. With the improvement in scale, free movement of goods and lower transit time is expected to bring overall efficiency thereby improvement in margin profile.

Aarti Industries

Aarti Industries (ARTO) is a global leader in Benzene-based derivative products. Has a diversified product portfolio with end-users in pharma, agrochemicals, specialty polymers, paints & pigments.

Recently, it bagged contract worth Rs 4,000 crore for the supply of high-value agro chemical intermediary from a global chemical supplier. Management’s focus on high margin products, forward and backward integration is expected to provide higher growth opportunities.

We expect PAT to grow at 22 percent CAGR over FY17-FY19. Given strong earnings outlook, we continue to remain positive on the stock.

Disclaimer: The author is Founder & CEO, 5nance.com. The views and investment tips expressed by investment expert on moneycontrol.com are his own and not that of the website or its management.

22 January 2017

17 January 2017

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