Super-bullish on IT; buy TCS, Tech Mah, Infy: Quant Broking

There is a high possibility of the Nasscom revising its growth guidance from 14 percent to 15 percent, believes Basudeb Banerjee of Quant Broking.

Speaking to CNBC-TV18, Banerjee says the IT sector is likely to consolidate in the days to come.

Also read: Dipan Mehta's strategy to play pharma, exporters, IT now

"With the employment scenario, the overall macro picture in the US gradually improving, IT budget of major fortune 500 companies are on the verge of getting increased- combining all these factors, it is too prolonged to see the IT sector remaining at the consolidation mode," explains Banerjee.

Below is the edited transcript of Banerjee's interview to CNBC-TV18.

Q: Is the market taking the US economy and the fact that Fed is tapering, is that too simplistic in terms of how the IT stocks have reacted. We have HCL Technologies at life time high and Infosys at life time high. What would be your approach in some of these names?

A: Since Q2 results the whole CNX IT has been in a consolidation mode. The rupee has also been consolidating around the 61.6-62/USD levels and Q3 that is the December quarter is typically a seasonally weak quarter for the whole sector because of higher furloughs. So, the whole sector has been stagnating but going ahead, if one looks at the duration from the month of February, March the whole market will start respecting FY16 numbers. There is a high possibility that the Nasscom growth guidance will get revised to around 15 percent from the current 14 percent. .

Also, if one looks at the very reason that US is looking forward to taper- with the employment scenario, the overall macro picture in the US gradually improving, IT budget of major fortune 500 companies are on the verge of getting increased- combining all these factors, it is too prolonged to see the IT sector remaining at the consolidation mode. Investors have started respecting that opportunity and this is the result.

Now, if we you look at specific stocks, there was definitely much upside left in HCL Technologies , it was trading around that sub Rs 1100 levels. Our price target is around Rs 1300 and definitely HCL Tech has been getting respect in this recent rally, it has moved up by almost 15 percent in over last fortnight.

Q: Can you give your specifics on Infosys as well as what you are expecting going into Q3?

A: For  Infosys Q3 we are expecting a quarter-on-quarter dollar revenue growth of around 200 bps out of which almost 80-100 bps will be cut. If one looks at dollar index, it has been moving favorably for the whole IT sector. Even TCS management guided for a 100 bps quarter-on-quarter benefit because of the cross currency movements.

I expect margins somewhere around that 26 percent level but I will focus more on the prospects of FY15 and 16 rather than the near-term this quarter numbers for Infosys. If one looks at Infosys, over last six quarters they have been focusing towards those discretionary spending related consulting system integration platform domains rather than focusing on the rebid infrastructure or ADM (application development and maintenance) deals where HCL Tech and  TCS has done a remarkable job.

So now if Infosys starts focusing on the high volume related segments, maintaining margin through the scale factor, through utilization improvement and the cost cutting exercise that Narayan Murthy has initiated, so definitely Infosys has the potential to reach the Nasscom guided growth levels of 14-15 percent rather than languishing at sub 12 percent levels. So shifting towards that 15 percent growth, maintaining a 26 percent margin along with risk of immigration bill gradually getting eroded, definitely Infosys has the potential to do well even from these levels.

Q: What would be your pecking order then in terms of the frontline IT names?

A: Pecking order top of the list will be Tata Consultancy Services (TCS) followed by Tech Mahindra, third will be Infosys. We were super bullish on HCL Technologies we since Rs 500 levels. I think that incrementally going ahead the margin lever in HCL Tech is no more there. Primarily, HCL Tech was a volume driven margin levered stock. Volume growth and revenue growth is already around that 15-16 percent levels. So, above Rs 1300 levels based on FY15, I don't see much upside left in HCL Tech. But if TCS, Tech Mahindra and Infosys are able to maintain margin going to their rebid deals, then they definitely would be better bets in the large cap space.

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Sensex slips 151 pts on Fed tapering; Bankex dips 2.4%

Dec 19, 2013, 04.09 PM IST

Federal Reserve's decision to scale back US fiscal stimulus by USD 10 billion a month to USD 75 billion may strengthen dollar and may also have an impact on foreign money inflow to India, feel experts.

Tags  Federal Reserve, BSE Sensex, Nifty, Market, US fiscal stimulus

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Sensex slips 151 pts on Fed tapering; Bankex dips 2.4%

Federal Reserve's decision to scale back US fiscal stimulus by USD 10 billion a month to USD 75 billion may strengthen dollar and may also have an impact on foreign money inflow to India, feel experts.

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Sensex slips 151 pts on Fed tapering; Bankex dips 2.4%

Federal Reserve's decision to scale back US fiscal stimulus by USD 10 billion a month to USD 75 billion may strengthen dollar and may also have an impact on foreign money inflow to India, feel experts.

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16:10

Moneycontrol Bureau
The market gave up some of previous day's gains on Thursday on fears that Fed tapering, which will begin in January, may impact inflow of overseas money. However, it rallied 158 points in opening trade to surpass the 21,000-mark on the Sensex following strong upmove in global peers, but immediately that rally washed out.

The Sensex slipped 151.24 points to close at 20,708.62, and the Nifty lost 50.50 points to 6,166.65.

Federal Reserve's decision to scale back US fiscal stimulus by USD 10 billion a month to USD 75 billion may strengthen dollar and may also have an impact on foreign money inflow to India, feel experts.

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Confidence Trading Company: Updates on outcome of EGM

Dec 19, 2013, 04.10 PM IST

Confidence Trading Company Ltd has submitted a copy of Special resolution passed by members at Extraordinary General Meeting (EGM) of the Company held on December 13, 2013.

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Confidence Trading Company: Updates on outcome of EGM

Confidence Trading Company Ltd has submitted a copy of Special resolution passed by members at Extraordinary General Meeting (EGM) of the Company held on December 13, 2013.

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Confidence Trading Company: Updates on outcome of EGM

Confidence Trading Company Ltd has submitted a copy of Special resolution passed by members at Extraordinary General Meeting (EGM) of the Company held on December 13, 2013.

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Confidence Trading Company Ltd has submitted to BSE a copy of Special resolution passed by members at Extraordinary General Meeting (EGM) of the Company held on December 13, 2013.Source : BSE

Read all announcements in Confidence Trad

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Action in Confidence Trading Company

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How core satellite fund help to select good stocks

Dec 19, 2013, 04.15 PM IST

"Core" fund, it is used to signify a basket of companies which are pre-dominantly large in nature, say typically companies having a market cap of 10,000 crs and above.

Tags  Harshvardhan Roongta, Roongta Securities , systematic investment plan

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How core & satellite fund help to select good stocks

"Core" fund, it is used to signify a basket of companies which are pre-dominantly large in nature, say typically companies having a market cap of 10,000 crs and above.

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How core & satellite fund help to select good stocks

"Core" fund, it is used to signify a basket of companies which are pre-dominantly large in nature, say typically companies having a market cap of 10,000 crs and above.

Comments (1)   .   Share  .  Email  .  Print  .  A+A-

"Core" fund, it is used to signify a basket of companies which are pre-dominantly large in nature, say typically companies having a market cap of 10,000 crs and above.

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MCX Gold June contract trades lower

At 15:59 hrs MCX GOLD February contract was trading at Rs 28738 up Rs 60, or 0.21 percent. The GOLD rate touched an intraday high of Rs 28850 and an intraday low of Rs 28672. So far 9130 contracts have been traded. GOLD prices have moved up Rs 2042, or 7.65 percent in the February series so far.

MCX GOLD April contract was trading at Rs 28149 up Rs 5, or 0.02 percent. The GOLD rate touched an intraday high of Rs 28318 and an intraday low of Rs 28148. So far 234 contracts have been traded. GOLD prices have moved up Rs 1499, or 5.62 percent in the April series so far.

MCX GOLD June contract was trading at Rs 28099 down Rs 135, or 0.48 percent. The GOLD rate touched an intraday high of Rs 28140 and an intraday low of Rs 28099. So far 2 contracts have been traded. GOLD prices have moved up Rs 431, or 1.56 percent in the June series so far.

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Silver prices gain 8.3% in March series so far

At 16:04 hrs MCX SILVER March contract was trading at Rs 45132 up Rs 398, or 0.89 percent. The SILVER rate touched an intraday high of Rs 45224 and an intraday low of Rs 44794. So far 7872 contracts have been traded. SILVER prices have moved up Rs 3482, or 8.36 percent in the March series so far.

MCX SILVER May contract was trading at Rs 46077 up Rs 400, or 0.88 percent. The SILVER rate touched an intraday high of Rs 46160 and an intraday low of Rs 45724. So far 98 contracts have been traded. SILVER prices have moved up Rs 3026, or 7.03 percent in the May series so far.

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Genus Power Infra: Outcome of restructuring committee meeting

Dec 18, 2013, 04.15 PM IST

The Restructuring Committee of Genus Power Infrastructures in its meeting held on December 18, 2013, has issued and allotted 9,77,19,120 equity shares of the Company to the shareholders of GPPL, whose name is recorded in the register of members of Genus Paper Products as holding equity shares on the Specified Date i.e. December 17, 2013.

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Genus Power Infra: Outcome of restructuring committee meeting

The Restructuring Committee of Genus Power Infrastructures in its meeting held on December 18, 2013, has issued and allotted 9,77,19,120 equity shares of the Company to the shareholders of GPPL, whose name is recorded in the register of members of Genus Paper Products as holding equity shares on the Specified Date i.e. December 17, 2013.

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Genus Power Infra: Outcome of restructuring committee meeting

The Restructuring Committee of Genus Power Infrastructures in its meeting held on December 18, 2013, has issued and allotted 9,77,19,120 equity shares of the Company to the shareholders of GPPL, whose name is recorded in the register of members of Genus Paper Products as holding equity shares on the Specified Date i.e. December 17, 2013.

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Genus Power Infrastructures Ltd has informed BSE that pursuant to the Scheme of Arrangement as approved by the High Court, the Company is required to issue and allot 24 equity shares of Re. 1/- each for every 100 equity shares of Re. 1/- each to the member of Genus Paper Products Ltd (GPPL) whose name is recorded in the register of members of GPPL as holding equity shares on the Specified Date.Accordingly, the Restructuring Committee in its meeting held on December 18, 2013, has issued and allotted 9,77,19,120 equity shares of the Company to the shareholders of GPPL, whose name is recorded in the register of members of GPPL as holding equity shares on the Specified Date i.e. December 17, 2013, The issued and paid up share capital of the Company now stands increased by 9,77,19,120 equity shares i.e. from 15,89,06,820 equity shares to 25,66,25,940 equity shares of Re. 1/- each.Source : BSE

Read all announcements in Genus Power

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Sensex snaps 6-day fall, up 248 pts on RBI status-quo

16:19

Moneycontrol Bureau
The market cheered RBI policy on Wednesday with the Sensex snapping six-day losing streak, rising more than a percent.

The Sensex surged 247.72 points to close at 20,859.86, and the Nifty climbed 78.10 points to 6,217.15, led by rate sensitive stocks.

Reserve Bank of India governor Raghuram Rajan surprised the street by keeping policy rates unchanged on hopes that inflation will fall going ahead.

The consensus was that the central bank would hike repo rate by 25 basis points.

Rajan said there is no room for complacency on the back of high CPI inflation and the central bank will act outside policy if food inflation does not soften. WPI inflation for November was at 7.52 percent and CPI at 11.24 percent.

With the Reserve Bank governor Raghuram Rajan putting action in the 'wait and watch mode', he introduced a certain degree of volatility and uncertainty into the market, Manishi Raychaudhuri, MD & Asian Equity Strategist at BNP Paribas Securities said.

After the RBI policy, now all eyes are on outcome of two-day Federal Reserve meeting that will end tonight. The market is looking for whether the Fed will start scaling back its monthly USD 85 billion fiscal stimulus in December or continue with the stimulus for some more time.

The broader markets also closed one percent higher. Nearly 1500 shares advanced as against 950 shares declined on the BSE.

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MCX Silverm April contract declines

At 15:49 hrs MCX SILVERM February contract was trading at Rs 45165 down Rs 200, or 0.44 percent. The SILVERM rate touched an intraday high of Rs 45679 and an intraday low of Rs 44960. So far 20143 contracts have been traded. SILVERM prices have moved up Rs 3311, or 7.91 percent in the February series so far.

MCX SILVERM April contract was trading at Rs 46127 down Rs 155, or 0.33 percent. The SILVERM rate touched an intraday high of Rs 46584 and an intraday low of Rs 45928. So far 695 contracts have been traded. SILVERM prices have moved up Rs 3127, or 7.27 percent in the April series so far.

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GSK Pharma a long term bet: Experts

Investors with a long term view of 4-5 years should hold on to the  GSK Pharma stock, says Sarabjit Kour Nangra of Angel Broking. The company in recent time has committed a lot of capex which no other MNC has done. This builds the confidence that the future earnings growth momentum for this company will pick up, she explains. She advises short and medium term investors to exit the stock now.

Also Read: GSK Pharma to perform even post open offer; hold: Edelweiss

Daljit Singh Kohli, IndiaNivesh Securities completely agrees with Nangra. However, he questions, will the stock not be available in the next five or six years at 25 times multiple or so, then why should an investor remain in the stock at 45 times multiple. "That is the reason why we are saying at this time you tender in the offer, you get out," he told CNBC-TV18.

Below is the verbatim transcript of Sarabjit Kour Nangra & Daljit Singh Kohli's interview on CNBC-TV18

Q: What would be your rationale on the view that you are taking on GSK Pharma?

Nangra: Investors who have a horizon of only one or two years and wouldn't like to hold the stock for beyond that should exit at these levels. Even if I normalise the earning volatility which has happened because of the current drug price control order (DPCO) at Rs 3100, valuations come at around 34 times CY12 numbers which we believe is pretty attractive for any investor to get into this stock. It is only for the investors who are willing to commit in this company beyond four to five years should stay put in this stock. The reason simply is that the company in the recent time has committed a lot of capex which no MNC has done it in the recent past and in fact even GSK has not done it in so many years. So, that definitely builds a confidence that the future earnings growth momentum for this company will pick up.

So, any investor who is willing to invest in this company beyond four to five years should easily make 20-25 percent return is our believe. So, long-term investors should hold on whereas near-term or short-term which we call in terms of fundamentals one to two years should take this opportunity to exit the stock.

Q: What is your opinion with regards to GSK and how are you placed on the long-term fundamentals, say four to five years down the line, how would you be placed on the fundamentals of GSK Pharma?

Kohli: For long-term fundamentals there is no doubt about this company. The only distinction between other MNCs and Glaxo has always been that it is the only company that does not have any private entity in India. So, whatever innovation or whatever products that the parent does, it comes to India in the listed company. This has been a problem with many other companies like Pifzer, Novartis, among others. We have had many other issues with other MNC companies. So, this was always the reason why Glaxo was given a premium.

Now, after the pricing policy clarity, the company has also committed large amount of money - Rs 600-800 crore for the new plant which will come in 2017. So, long-term there is no doubt but the question is in the next five years will you not get the opportunity to buy the same stock at 25 times multiple? Then why should you remain in the stock at 45 times multiple? So, it is the question of valuation, at entry point what you should do. That is the reason why we are saying at this time you tender in the offer, you get out. Maybe at some point in time in over next one to two years you will get an opportunity to buy this stock again which will be at much cheaper price.

If we compare it to the Hindustan Unilever (HUL) offer, the same thing happened. The offer came in, the stock went up so high and then for the last 3-6 months what we are seeing? So, if anybody would have given then he had an automatic opportunity in built that he could get in again. So, just take that thing in mind that you can definitely – this is a stock which should be there in your portfolio for a much longer period but at any point of time we have to be mindful of valuation. At 44 times or 34 times of CY15 and that too if you see in the last four quarters this company has not been performing. 5-6 percent kind of growth in fact after this new policy coming in has been a big drain resulting in 30 percent fall in profit. So, in terms of fundamentals they don't deserve more than 20-21 times. It was because always this expectation was built in that some day parent will increase the stake or delisting will happen - that is the reason you were seeing this kind of multiple. So, it is already overpriced. There is no reason for one to remain in this now.

Q: How do you think the stock will move now once the open offer is out of the way? At what point do you think fresh money will come in or at what point do you think some of the long-term investors would again see value in the stock and buy once this open offer is out of the way?

Nangra: Difficult to pin-point as to the stock movements but definitely once this offer is over the stock will again go back to mirror the fundamentals there is definitely a very long-term story there. However, given the fact that it is the pharma industry, valuations or stock volatilities tend to be lower. Especially as in the case of GSK we have seen it is a sturdy stock within the MNC pharma pack and it has given strong outperformance vis-à-vis other MNC companies.

So, it will remain softer and definitely for a couple of years unless DPCO effect should get negative next year onwards. Market is a bit conservative on the numbers so it will get revised. So, it will go along with the quarterly estimates. I can't pin-point a number but I guess our call is that investors should stick to the company for long. Definitely near-term if somebody is looking one or two years it makes good sense to exit the stock.

Q: Has the GSK Pharmaceutical story brought up opportunities in different pharmaceutical stories or MNC companies that are listed for example something like Merck?

Kohli: Merck is the only company in the listed space which has much lesser parent stake. I think around 50-56 percent or something. Others, all of them have 75 percent. So, there is not much of a scope unless they decide to go for delisting. So, Merck is the only one. However, Merck has a problem that its parent also doesn't have that kind of financial muscle to buy this stock - the kind of floating stock that is available. So, I guess they will need a lot more time or something happens at the parent and then only in Merck you could see this opportunity come. Only thing what this deal will do is for Merck shareholders that now they will become more sticky and people will start waiting. These things will take their own time, nobody can time them but I guess this will take time. However, in Merck case also it has been growing at a very low pace, only 6-7 percent. Definitely the valuation comfort is there in Merck. It is trading even now after 15-20 percent move in the last few days, it is still trading at 12 times or something CY14. So, Merck is definitely a good area to look at; good stock to buy.

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