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Thursday, January 31, 2008

Value Picks from Experts


One of the fundamental principles of investing or wealth maximisation is to buy stocks at the right price which is difficult to achieve in a market that has been moving up since the last four years.

The current mayhem in the domestic stock market provides an opportunity to buy quality stocks at cheaper valuations. After the bloodbath in the last few days, which saw bouts of selling across the board, many experts believe that this is the right time to identify and pick good stocks, as valuations are fairly attractive relative to fundamentals.

Most investment experts believe that fundamentally nothing has changed and that India
remains a long-term growth story with GDP expected to grow in excess of 8 per cent over the next few years.

Check out the more than 20 stocks (in the table below) that experts believe can make you a fine packet over time.

The domestic consumption-led demand augurs well for the economy as it largely insulates it from the potential slowdown in global growth and this should continue to reflect in the markets.

We spoke to experts to know whether it is the right time to invest and what, according to them, are the value picks. "We believe that one should play big in banking & financial services and capital goods & engineering services sectors as they have now come to very reasonable levels and provide compelling investment opportunities. If you look at such 6 sigma events in the past due to technical factors, the market has provided great investment opportunities. This is the right time to invest and one can expect 30-40 per cent returns, may be more, in next three to six months," said Vikas Khemani, co-head of institutional equities, Edelweiss Capital.

Amitabh Chakraborty, President-Equity, Religare Securities, said: "We believe the market is trying to find a bottom. The exogenous factor, such as US recession has in general caused risk aversion, so a few FIIs , especially hedge funds have sold. Additionally some large proprietory book players had to liquidate their position, not only in India but across Asia."

"India has been the best performing market until now, naturally in a liquidity squeeze back home, these pop book have turned sellers. We believe this week market will stabilize, and if volatility gets reduced, slowly market will recover, as the refund money from  Reliance Power issue comes back to the system and the market builds on budget  expectation in February," he added.

"There is no direct impact as banks in India are not exposed to CDOs with sub prime assets. However, India is exposed to global risk aversion because of anticipated deep recession in the US. Much of industrial growth last year was due to easy capital, mostly from the private equity and FCCB or through the QIP route. If that flow tapers off, as risk become costly, then India's growth story might come under risk., at least over a medium to long term perspective."

"We have advised our clients to adopt a wait and watch policy as there has been no change in fundamental macro story. If investors are holding sound micro story, they should avoid selling, as n our opinion this is not the right time to get out."

"As the market has fallen so much, recovery will be led by the blue chips. We believe Reliance Industries, L&T, ABB, SAIL, SBI offer value, purely from price performance point of view. We like HDIL, KS Oil, HCC, MRPL, Opto Circuit and Punj Lloyd in the mid-cap space."

Shahina Mukadam, head research, IDBI Capital, said: "The Profit booking and selling by FII's in the last couple of sessions has been a major factor in the sharp market correction. The markets recovered post lunch with support from the domestic institutions and mutual funds and we expect that the markets will stabilise at the current levels."

"The impact of the US subprime crisis on the financial sector is having its ripples across the world and selling is happening across global markets. Investors should start investing if not already doing so in the markets at the current levels and should buy fundamentally  strong companies."

"Almost all sectors / stocks have corrected and a near term rebound is likely in blue chips in oil & gas / telecom / banks."

Most of market pundits prefer stocks in sectors like capital goods, power and power equipment, infrastructure, financial services and telecom.

These sectors provide long-term visibility and sustainable earnings growth. With regards to individual stocks, the experts recommend the following 'value' picks (see table: Value Picks).

VALUE PICKS FROM EXPERTS

Harendra Kumar

Head of Researchm, ICICI Direct

Ajay Parmar

Head of Research, Emkay Shares

Amar Ambani

Head of Research, India Infoline [Get Quote]

Vikas Khemani

Co-Head of Institutional Equities, Edelweiss Capital

Reliance Industries DLF Jaiprakash Associates [Get Quote] Larsen & Toubro
Reliance Communications [Get Quote] HDIL BHEL BHEL
Tata Motors [Get Quote] Jaiprakash Associates ITC Punjab National Bank [Get Quote]
NTPC Tata Steel [Get Quote] GMR Infrastructure [Get Quote] Power Grid Corporation
Power Grid Corporation BHEL Patel Engineering [Get Quote] Reliance Communications
JSW Steel [Get Quote] Aban Offshore [Get Quote] ICICI Bank [Get Quote]
HDIL Lanco Infratech [Get Quote] Voltas [Get Quote]
Oriental Bank of Commerce [Get Quote] ITC
Indian Overseas Bank [Get Quote]

Source - Rediff.com


Sunday, January 27, 2008

Indian firms still big in IT services, says survey

Indian firms came first in four out of 10 information technology service categories in a global survey that selects the 100 best IT services providers. US-headquartered IT firms topped in four other categories and one firm each from Mexico and China took the other prizes in the 4th Cybermedia Global IT Services Survey.

Overall, the survey affirmed India’s standing as a major outsourcing centre. India also led the way as the global delivery centre for IT service companies, with many non-Indian firms clearly favouring India. However, the survey also revealed that the rising rupee was the number one concern for many such firms.

Tata Consultancy Services was rated the best performing IT services company. HCL Technologies was rated the best performing infrastructure service provider. Genpact was rated the best performing BPO provider and WNS Global Services was the rated the best performing FAO provider.

The US firms were EDS, Sitel, EPAM Systems and Computer Sciences Corporation – all of whom have a footprint in India as well. Mexican and Chinese firms won in categories that were region specific. India is rated the number one hub for global delivery of IT services. Fifty-seven per cent of IT service employees working in delivery centres, says the survey, were located in India. Only 18 per cent were based in the US. This reflects how many non-Indian firms keep their delivery centres in India.

In the listing of the 100 best IT services firms, Indian companies trailed those in the US but were well ahead of any other country. Forty-three US-headquartered firms dominated the 100 best firms. There were 29 firms in the list. There were four Chinese companies, four from Malaysia, three from Russia and three from Brazil. There a scattering of other firms in countries ranging from Argentina to the Ukraine. The survey said these “were a gentle reminder” of the presence of other countries that could become outsourcing rivals to India.

Two years ago the same survey listed 36 Indian firms and 32 US firms in the top 100. This shift to US-headquartered firms may reflect both the fact many Indian firms are being bought up by US firms and a consolidation in the upper end of the Indian IT services industry.

However, 47 per cent of the respondents, including many from India, said a falling dollar and rising local currency was their “most critical business concern.” The survey says “Indian service providers who derive between two-thirds to three-fourths of their revenues from the US are back to the drawing board to consider non-US avenues.” Firms in the Philippines and Canada also listed currency problems as their main business headache.

 

 

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Saturday, January 19, 2008

Build your mutual fund portfolio with care


Once you begin investing in mutual funds, do not constantly monitor or fret about it. The concept of mutual fund investing is based on you being a passive investor. Some pointers on how to build your mutual fund portfolio.



Shanthi Venkataraman

What’s up in the stock market? If you do not know and don’t have the time or the inclination to find out, then mutual funds may be the better option for you. But before you contact the distributor near you, be prepared to do some homework first. Though you may have someone else to manage your money for you, you still need to build your mutual fund portfolio with care. Here are some pointers to get started.

Determine investment amount: If you have just begun saving and do not have a significant surplus in your bank account, start small. Begin by investing a few thousand rupees every month. Systematic investment plan (SIP) is a good option for those who wish to build their fund portfolio gradually. As it works on auto-pilot, it prompts saving in a disciplined manner. It also minimises risks of bad timing of investments. Once you become a more seasoned investor, capable of timing your entry into the market, you may choose to invest a lumpsum amount. Remember to invest in equities only that sum of money that you will not require for at least three years.

Allocation pattern: Before you begin to short-list funds, sketch your basic allocation pattern. Your portfolio of funds must have an allocation pattern that meets your return objective and is in line with your risk profile. Young investors with a moderate-risk appetite, for instance, can have a 60 per cent allocation to large-cap oriented funds and a 40 per cent allocation to mid-cap funds.

You could create a core and satellite portfolio. Your core portfolio of funds should typically be plain vanilla diversified funds that have outpaced markets consistently over a three-five year period. Hold these funds for at least a three-five year period.

You can allocate a small portion of your portfolio, say 20 per cent, to funds you would like to experiment with. For instance, sector funds or international investing funds or value or contra funds. These funds can help enhance the overall returns. But such funds also carry a higher risk profile and may outperform in short bursts. As such, they may require more frequent monitoring and you will have to be more active in booking profits on these funds.

Short-listing funds: Once you have decided your allocation pattern, you can arrive at a short-list in each category — large-cap, mid-cap, blended cap funds. A fund’s performance track record is probably the most important criterion for selection. But do not let your investment choices be guided completely by recent fund performance. Instead, choose funds that have outperformed their benchmark and the markets on a consistent basis.

There are now several Web sites that provide you with mutual fund options. Identify funds that figure in the top 25 per cent of the fund rankings across time-frames in each category. Once you short-list the funds, you can zone in, depending on your return objectives and risk profile.

Qualitative factors: Besides performance, you need to consider qualitative factors as well. This requires some more effort, but is necessary for those who are serious about building wealth. Visit individual fund house Web sites and take a look at the fund’s objective or mandate as defined in its offer document. The fund house can, at times, define these objectives rather vaguely. Try and identify funds that have a well-articulated strategy and that tend to largely stick to their investment objective. Conviction in ideas is something to be valued. If a fund has a loosely defined investment objective, it might stray from its mandate, which will defeat the purpose of your investment.

Diversify your portfolio well. Do not choose too many funds from the same fund house. Choose funds with different styles of management. For instance, some funds may tend to diversify their portfolios substantially, limiting individual stock exposures to 5 per cent. Others may take concentrated sector exposures.

Some funds may aggressively churn their portfolio. Ultimately, the fund must be able to compensate you for the risk taken. Invest in a mix of management styles to maximise your returns for a given level of risk. Read interviews with fund managers. It might give you a better idea of their conviction/ capabilities. Track changes in fund management.

Number of funds: Once you have identified funds that match your criteria, how many funds should you invest in? There is no ideal number. If your objective is purely diversification, even five funds with different styles should suffice. More funds may lead to significant overlap of stocks and sectors.

Tracking the performance of a large number of funds also becomes cumbersome. If you are using the SIP route and investing small sums, limit the number of funds to three to five. As your investment surplus swells, you may invest in up to 8-10 funds. But beginners may limit their holdings to a handful of funds.

Tracking portfolio performance: Once you begin investing in funds, do not constantly monitor or fret about it. Remember, the entire concept of mutual fund investing is based on you being a passive investor. However, do review the performance of your funds once in six months. Compare funds to their benchmark and then to their peers. There could always be temporary blips in performance. But this is no reason to re-draw your portfolio.

A mutual fund needs to be treated as a long-term investment vehicle and should be held at least over a two-three year period. Fund managers take a long-term view of the markets. Therefore, you need to stay invested with the fund for a long period to realise the full benefits of its investment strategy.

The usual caveats: Avoid investing in new fund offers, unless the offering is unique. Do not be lured into investing in funds by dividend declarations. They make no difference to your wealth. Do not choose a fund based on its relatively lower net asset value.

NAV is nothing but the market value of securities held in a fund’s portfolio. A fund that has a higher NAV probably has a longer track record or has been a better performer.

 

 

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Monday, January 14, 2008

Interesting Information written on Reliance Power IPO

Reliance Power Limited IPO

Opens: 15th January 2008.
Closes: 18th January 2008.

Price Band: Rs 405 to Rs 450.
Price Band for Retail Investors: Rs 385 to Rs 430. (Rs 20 discount).

Number of shares offered to public: 22,80,00,000 (22.8 crore).
+ Number of shares to be subscribed by promoters: 3,20,00,000 (3.2 crore).

Total new shares issued (sum of above two) = (26 crore)

Number of shares for retail investors: 6,84,00000. (6.84 crore).

Issue size (public) = (22.8
-6.84)X 450 + (6.84X 430) = 7182+2941.2

= Rs 10123.2 crore.

Number of shares outstanding pre-IPO: 200 crore.
Number of shares outstanding post-IPO: 226 crore.

=======================================

Retail Investors and NII can apply with Rs 115 margin per share. (The details of this have already been discussed in earlier posts).

Maximum application possible in retail category = 225 shares.

=======================================

Already, a lot has been discussed about Reliance Power and its business (which will be there a few years from now).

This is an extremely rare case where SEBI has allowed a company with almost 0 revenues, to raise money via an IPO.

If this was an IPO by some smaller group, it would have been 100% rejected by SEBI for having no business.

=======================================

Business:

The company claims that it will be developing power generation projects of 28200 MW over the next decade.

According to the IPO RHP, some of the projects that it will be developing are:

Rosa-I (to be commissioned in March 2010) - 600 MW - Coal based.
Butibori (to be commissioned in June 2010) - 300 MW - Coal based.
Rosa-II (to be commissioned in September 2010) - 600 MW - Coal based.
Shahpur Gas (to be commissioned in March 2011) - 2800 MW - Gas based.
Shahpur Coal (to be commissioned in December 2011) - 1200 MW - Coal based.
Dadri (to be commissioned in March 2013) - 7480 MW - Gas based.
Krishnapatnam (to be commissioned in September 2013) - 4000 MW - Coal based.
Urthing Sobla (to be commissioned in March 2014) - 400 MW - Hydropower based.
Tato II (to be commissioned in March 2014) - 700 MW - Hydropower based.
MP Power (to be commissioned in July 2014) - 3960 MW - Coal based.
Siyom (to be commissioned in March 2015) - 1000 MW - Hydropower based.
Kalai II (to be commissioned in March 2016) - 1200 MW - Hydropower based.
Sasan (to be commissioned in April 2016) - 3960 MW - Coal based.

If

everything goes as planned, capacity of Reliance Power at end of each year till 2016 will be:

2008: 0 MW.
2009: 0 MW.
2010: 1500 MW.
2011: 5500 MW.
2012: 5500 MW.
2013: 16980 MW.
2014: 22040 MW.
2015: 23040 MW.
2016: 28200 MW.

=======================================

Other Similar Companies:


I can think of two companies in the power generation sector that Reliance Power can be compared with:

NTPC and Tata Power.

NTPC has current capacity of 28000 MW and has target to achieve 66000 MW by 2017. (See this thread on NTPC).

Tata Power has current capacity of 2300 MW.
It will be adding 10000 MW of capacity more by 2012. Thus, it will have a capacity of around 12300 MW by 2012 end.
The additions will all be coal based.
-Mundra Ultra Mega Power Project -4000 MW.
-Power plants in Maharastra - 3000 MW.
-Captive power plants for Tata Steel - 2000 MW
-Maithon Power Plant at Jharkhand - 1000 MW.

Tata Power also has other smaller business and also wants to enter shipping and logistics. Besides that Tata Power has investments valued at Rs 400+ per share of Tata Power. This works out to be Rs 10000 crore.

Around 2012 - 2013, both Tata Power is expected to have similar capacity as Reliance Power.

The interesting thing is at current price of Rs 1457, Tata Power is valued at just Rs 30000 crore. Remove Rs 10000 crore of investments and you can have it only for Rs 20000 crore.

At Rs 900, Reliance Power will have market value of 200000 crores....6.67 times that of Tata Power. .

========================================

Financials:

With 2300 MW capacity, Tata Power made standalone profit of Rs 700 crore in FY 2007.

With 28000 MW capacity, NTPC made standalone profit of Rs 6900 crore in FY 2007.

Lets assume Reliance Power turns out to be much more efficient than these two companies. Add to that increased power rates.

With 28200 capacity, assume Reliance Power makes Rs 15000 crore of net profit in 2016-2017. Power companies are considered as utilities and worldwide trade at 10-15 times their earnings.

Lets assume 15 times ratio for Reliance Power in 2016.

What will be its market value?

15000 X 15 = Rs 225000 crore or Rs 995 per share.

This is an optimistic view:
-there will be no further equity dilution till 2016.
-assuming nearly twice as much efficiency as NTPC.
-that all projects will be completed before 2016 end.
-the company would have paid back all debt by then and interest costs would be in similar range as NTPC.

(NTPC already has established 28000 MW capacity and comparatively much lesser interest costs. (NTPC's P&L account states Rs 1800 interest cost for FY 2007).

So what about the debt?

The RHP mentions estimated cost of six projects Rosa I, Rosa II, Butibori, Sasan, Shahpur Coal, Urthing Sobla as Rs 30000 crore+.

Analysts estimate that Reliance Power will need Rs 70000 crore of debt to finance its projects which are estimated to cost 100000 crore+.

Rs 70000 crore of debt is not going to come at 2% interest rate. Even a 6% interest would mean an annual interest cost of Rs 4200 crore. Only in 2013, the company's capacity will cross 10000 MW. Thus, I do not expect any major debt repayment before 2014. If things don't go as planned, the debt burden will make a mockery of the balance sheet.

With Rs 12000 crore raised in equity and Rs 70000 crore of debt, these whole business will become a high-risk venture.

Any unforeseen delay/derailment of plans may create major problems for this company.

========================================

Reliance Power - The Overlooked Fact:

Is Reliance Power just "Reliance Power"?

No.

It is actually "Reliance Power Limited" - a limited company.

 So what does this mean for Reliance Power Limited?

It means if in the rare case, the calculations of the management go wrong and the company somehow goes to insolvency, none of the shareholders will lose anything expect the value of the shares.

If you are a share holder of Reliance Power and it goes into insolvency (unable to pay back debts), what do you stand to lose?

Rs 430 per share.

Lot of money....right?

What does Anil Ambani's AAA Project or REL lose?

Both of them had got their 45% (post-IPO) stake for Rs 1000 crore each. Plus they will each subscribe to 1.6 crore shares each at Rs 450 in the IPO......which works out to be Rs 720 crore.

Thus, AAA Project will be getting 101.6 crore shares of Reliance Power for Rs 1720 crore and REL will be getting 101.6 crore shares of Reliance Power for Rs 1720 crore.

Little less than Rs 17 per share.

This is what both the promoters are risking in this project....Rs 17 per share; while investors will be risking Rs 450 per share.

This is exactly the reason why Reliance Power was created.

First, by contributing just Rs 1720 crore each to Reliance Power, the promoters have shifted all risk to investors.

Second, by getting 45% stake (in REL's projects) to AAA Project for a mere Rs 1000 crore, AAA Projects (and Anil Ambani) have created wealth out of thin air.

Anil Ambani's Rs 1000 crore investment will be worth Rs 100000 crore when Reliance Power lists at Rs 900.

If the gamble works, the promoters (holding 90% stake in Reliance Power) will be worth billions of dollars.

If the gamble doesn't work, the promoters will lose Rs 1720 crore each and investors will lose Rs 10000+ crore which they will be paying for a mere 10% stake in Reliance Power.

What a way to create wealth...!!!....I don't have words to describe the brilliance of Anil Ambani's plans....

========================================

So what will I do with this IPO?

Firstly, I will subscribe to it,

not because I think it is a good company or is offering great value at Rs 430,

but because I am in this market to make money.

The markets are in such a frenzy, nobody bothers about valuations anymore........not even QIB and other institutional investors.

Everyone knows that Reliance Power will list at a premium and thus everyone will apply....valuations can wait for some other day.....

Everyone should wait till last day and apply for it. Just check the subscription levels by 11 AM on last day.
========================================

What will I do post-listing?

For bigger IPO's like Power Grid and Mundra Port, I have followed a sell-half-keep-half strategy.

Assuming listing at Rs 900, for Reliance Power, I will follow sell-all-keep-none strategy.

First, other companies are much cheaper.

Why should I keep a company valued at Rs 200000 crore -

when another company (with similar capacity by 2013) is available at Rs 30000 crore with much smaller debt burden and Rs 10000 crore worth of investments...........referring to Tata Power.

If Reliance Power (at Rs 900) is available for Rs 200000 crore, why not buy NTPC for a similar price......Rs 225000 crore. NTPC plans to have a capacity of 66000 MW in 2017, while Reliance Power will have 28200 MW capacity in 2016.

Second, the risk is higher than other existing companies.

With marginally cash flows for next 5 years and Rs 70000+ crore of debt, the risk for Reliance Power is high. Tata Power and NTPC have existing cash flows to handle expansions....Reliance Power does not.

Third and the biggest factor is....the valuation of the company doesn't make much sense.


Why should Reliance Power be valued at Rs 200000 crore, when in highly optimistic scenario, it will not make more than Rs 15000 crore of profit in 2016? Even if it touches that figure of Rs 15000 crore, its market value in 2016 will not be much more than 225000-300000 crore. (if given a 15-20 times multiple).

A fixed deposit will make more money than that in 8 years.....and that too without any risk.

Also, I got the optimistic Rs 15000 crore figure by assuming two times margins as NTPC.

The fact is..... at least till 2014, Reliance Power will still be carrying most of its Rs 70000 crore debt and its interest costs will squeeze margins to a large extent.

========================================

Final verdict:

Apply.

I will be selling all shares at 9:55..........not even waiting for a better price.

If you want to try for a better price, hold at your own risk.

The level of insanity in the markets is at a high...

Value and risk mean nothing today.....price and profit are the keywords.

Who knows.....the stock may got to Rs 1100 or more.

========================================

Addendum:

Reliance Power may win more projects in the future.

However, it is unlikely that any new project that Reliance Power gets will be commissioned before 2012. Additional projects will also bring additional costs too.

It doesn't make much sense to consider future projects before they are actually won.

Also, Reliance Power is winning projects by offering very low rates - another factor that will decrease margins and increase risks for the company.

For example, in case of Krishnapatnam Ultra Mega Power Project, Reliance Power won with a bid of Rs 2.33 per unit.

L&T had bid Rs 2.69 per unit and Sterlite had bid Rs 4.19 per unit. Such aggressive pricing may backfire if costs rise due to some unexpected factors.

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Friday, January 11, 2008

Should you still hold on to your Infy stock?

2008-01-11 11:47:14 Source : CNBC-TV18

Infosys Technologies has announced its third quarter numbers. It has posted consolidated net profit of Rs 1231 crore for the quarter ended December 2007 as against Rs 1100 crore  in previous quarter.

Infosys Technologies has announced its third quarter numbers. It has posted consolidated net profit of Rs 1231 crore for the quarter ended December 2007 as against Rs 1100 crore in previous quarter. The company has issued its guidance for FY08.  In dollar terms, it sees its FY08 revenues at USD 4.17 billion versus USD 4.18 billion. The FY08 guidance assumes tax reversal of Rs 101 crore.

 

What do these numbers mean? Should you still hold on to your Infosys stock? CNBC-TV18 found what market experts had to say -

Reacting to Infosys results, market analysts like Nilesh Shah of Envision Capital said, “Broadly, the numbers are in line with expectations. The heartening fact is that the company has been able to meet its guidance and numbers are probably a tad better than their guidance."

But it that something material enough to swing markets in another direction and charter a new course for the markets?

He said, "My sense is that the numbers aren’t good enough to do that and in the short-term what is very important is the market sentiment and there are definitely other factors driving the sentiment for the market in addition to the quarterly numbers of Infosys.” 

Speaking to CNBC-TV18, Moshe Katri, MD, Cowen & Company

 also thinks Infosys numbers are inline with expectations and there are not too many surprises. The valuations and sentiments of the company are at historic lows, he said. He likes the Infy ADR on 6-12 month basis, but the rally will be short-lived, he said.

 “The numbers are actually pretty much inline. If one normalizes the tax rate, the matrix, if one looks at pricing, the hiring numbers, the growth in BFSI, the new client addition, I don’t think there are too many surprises here and remember that we got into this quarter with extremely low and negative sentiment and low expectations for Infosys and probably the group in general. I think the stock will continue to be volatile and the big issue right now is directionally what happens to the Budget 2008 and at this point certain data will impact the performance probably during the next few months,” he said.

But Dipan Mehta, Member BSE and NSE

thinks Infosys numbers are lower than the market estimates. According to him, the stock will remain at the levels that it is at. Dipan said the best way to play the IT sector is to stick with the midcaps as they would offer out performance as compared to the largecap IT stocks.

Mehta said, “One the face of it, the numbers look quite exciting. But when one considers the Rs 50 crore tax right back, the numbers are more or less in line with market expectations. In any case, there wasn’t much of enthusiasms or expectation from Infosys numbers. I think the stock will remain at the levels at which it is. This may just be an event which will come and go and not impact positive view on this particular stock too much or its price movement going forward. The YoY growth rates are now between 16-18%. If we consider that for FY10, the tax implications will also start trickling in, then these growth rates YoY would further deteriorate.”

Apurva Shah, VP & HOR, Prabhudas Lilladher told CNBC-TV18 that in terms of revenue, the Infosys results were below expectations though the margin performance was quite surprising. He added that they have gained everything they had lost in margins in quarter one.

"In phase of all the troubles that they are facing, because of the currency, I think a performance like this on the margin front is really impressive. They have gained everything they had lost in margins in quarter one. They had lost about 300 basis points in quarter one; in fact more has been recovered in quarter two and quarter three." he said.

SA Narayan

, MD, Kotak Securities said that Infosys’ Q3 results are in line with expectations. He sees Infosys' Q4 growth at 20%. He said, “I think Infosys results were in-line with what the markets expected. To that extent it was good and the good part is that there were no negative surprises on that. And I think the next quarter will be reasonably on the same lines and the market is expecting that the company will grow about 20%, which is an EPS of about Rs 95-96 for the future which means that Infosys is trading at about 16 times to FY09. This is on a broad basis reasonable on current valuations. What the market is still concerned about is that how much will the downturn in the US markets and the European markets will substantially affect the topline. So we need to wait and watch for guidance for the next year. So to that extent, on a broad basis, no negative surprise is a good news; but the markets would still like to wait and watch before deciding whether they can take a positive view on the stock.”

 

"The Infosys numbers very clearly signal that continued business strengths and comparative advantages have not deserted the company and in a very difficult rupee environment we have seen the company post a topline growth and a fairly reasonable bottomline growth as well. It very clearly indicates that you ought to continue being invested in the sector and perhaps even buy on declines. IT would easily be the sector to expect multiple gains from over the next couple of years, despite the difficult currency environment," Rajesh Jain, Pranav Securities said.

 

 

 

 

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