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Reports India

Indian stock market and companies daily report (March 19, 2014, Wednesday)

March 19, 2014, Wednesday, 05:53 GMT | 01:53 EST | 10:23 IST | 12:53 SGT
Contributed by Angel Broking


The Indian Markets are expected to open flat with a positive bias, tracking SGX Nifty which is trading marginally higher by ~0.3%. Asian markets are trading in a mixed manner.

US markets rose higher on Tuesday with traders reacting positively to Russian President Vladimir Putin's comments that he does not plan to seize any other regions of Ukraine following the annexation of Crimea. Meanwhile the markets are also keenly awaiting the announcement of the Federal Reserve's latest monetary policy decision on Wednesday, in which it is expected to announce plans to scale back its asset purchase program by another $10 billion to $55 billion per month. During the day the Commerce Department released a report before the start of trading showing that housing starts fell modestly in February but from a notably upwardly revised level in January. Europeans markets too rose higher on Tuesday buoyed the comments of Russian President.

Meanwhile, Indian markets which gained in the initial trade to touch record highs pared most of the gains to end the day marginally higher.


Markets Today

The trend deciding level for the day is 21,886 / 6,529 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 21,987 - 22,142 / 6,563 - 6,609 levels. However, if NIFTY trades below 21,886 / 6,529 levels for the first half-an-hour of trade then it may correct 21,732 - 21,631 / 6,483 - 6,448 levels.


TCS - Analyst Meet Update

Tata Consultancy Services (TCS) hosted an analyst briefing with Mr. Rajesh Gopinathan, CFO. Following are the key takeaways:

Strong demand environment with no change in outlook: The management indicated that overall demand remains good and in line with its expectations, with 1HFY15 growing faster than 2HFY15. This is expected to be led by the likely return of discretionary spending, increased penetration in Europe and that the company has not seen any ramp downs or cancelations in projects in recent weeks.

Seasonality-led weakness in revenue growth in 4QFY2014: 4QFY14 has traditionally been a relatively soft quarter in terms of volume growth for IT companies and this year is expected to be no different. We believe TCS is likely to deliver a 2.7-3% qoq volume growth in 4QFY2014 but this should not be any indication of slowdown in demand. Management indicated that along with expected seasonal softness in international revenues (vs. 3Q), domestic revenues are also likely to be weak in 4QFY2013 due to hit in IT spends ahead of the upcoming Central Government elections.

Operating margin to decline marginally: TCS expects EBIT margins to decline by ~40-50bp qoq largely due to ongoing investments to enter newer geographies and services lines. The company maintained that margins may stabilize in the 27%-28% band in the long term.

Outlook and Valuations: We expect TCS to outperform industry on revenue growth due to its superior market reach and excellent execution capabilities. Management commentary on demand trends for FY2015 continued to be reassuring led by a favorable demand environment and market share gains. We expect TCS to grow its USD revenues at a CAGR of 16.5% over FY2013-15 and EPS at a CAGR of 25% during this period. TCS has executed well over the past many quarters and currently trades at 18.5x FY2015E EPS. We believe TCSRs. premium multiples are well deserved given consistency in performance and leadership in growth/profitability. We maintain our Buy rating on the stock.


Infosys inks 5-year deal with Sweden's Lansforsakringar

Infosys signed a five-year pact with Swedish group of customer-owned insurance companies Lansforsakringar AB (LFAB) to provide application development and management support for life and non-life insurance businesses. Under the agreement, Infosys will help LFAB improve its quality of service and time to market for its alliance members at a reduced cost. Infosys will be responsible for the development and management of over 200 applications across LFAB's lines of business. Financial details of the deal were not disclosed. We recommend Accumulate rating on the stock.


Tech Mahindra in deal to provide IT services to Volvo Car Group

Tech Mahindra bagged a deal from Volvo Car Group to provide the latter end-to-end IT infrastructure support and services in key countries globally including Sweden, China and Belgium. The scope of the partnership, which was signed in February, covers 2,800 servers across Volvo CarsRs. regional offices, global factories, global datacenter, R&D and manufacturing IT. The service also covers 4,000 factory devices in Sweden, Belgium, China and 30,000 end users and their work devices, including parts of the Volvo Cars dealer network. The partnership also encompasses application maintenance and development, including the introduction and management of a hybrid cloud strategy. We maintain our Accumulate rating on the stock.


Economic and Political News

- Open to govt funding if there are no strings attached: M R Madhavan

- EGoM to take a call on crop damage relief to states on Wednesday

- Internet-influenced insurance sales to touch Rs.400Kcr by 2020:Study


Corporate News

- SAT asks SEBI for written submissions on RIL case

- Sesa Sterlite's copper smelter to be shut for 22 days

- Polaris splits product business into new entity