External broker reports(aggregated public sources), HDFC Securities

HDFC Securities

External broker reports(aggregated public sources)

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Content available is external broker reports authored by a third party outside the Smartkarma network and has been aggregated by an online aggregator through publicly available sources and is displayed by Smartkarma in this format for user's convenience and general informational purposes only. Content does not constitute investment or financial advice and Smartkarma makes no representation or warranty regarding its accuracy or contents. Original third party author retains all copyright and other proprietary rights in the content. Access or use of third party links not controlled by Smartkarma are at the user's own risk.

Thematic (Sector/Industry)

<div><div><div><div><ul><li>Top-down assessment: Despite the correlation to the macro, the demand for the sector is structural (double-digit CAGR over five years is high probability).</li><li>Enterprise trends–growth vectors: Enterprise tech spends are strong and there’s limited impact on overall growth due to any vertical-specific slowdown.</li><li>Cloud partnerships–the second order impact: Tech value migration towards cloud providers is underway and will drive the growth curve of SIs.</li></ul><ul style="list-style-type: none;"><li><div><div><div><div><ul style="list-style-type: none;"><li> </li></ul></div></div></div></div></li></ul></div></div></div></div><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

Top-down assessment: Despite the correlation to the macro, the demand for the sector is structural (double-digit CAGR over five years is high probability).Enterprise trends–growth vectors: Enterprise tech spends are strong and there’s limited impact on overall growth due to any vertical-specific slowdown.Cloud partnerships–the second order impact: Tech value migration towards cloud providers is underway and will drive the growth curve of SIs. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

<ul>
<li>IT index is up &gt;40% (mid-tier &gt;100%) over the past year, supported by (1) earnings upgrade of ~5% for tier-1 IT and ~20% for mid-tier IT and (2) IT index rerating from 23x to 28x</li>
<li>The absolute return potential for the sector is likely to be moderate (in line with earnings growth), basis: (1) growth reverting to medium-term baseline, (2) lower growth dispersion in FY23E as compared to FY22E, and (3) headwinds to multiple expansion based on increase in cost of capital &amp; geopolitical risk premium, inflationary factors, and the lead-lag cycle of cost and pricing</li>
<li>The upside risk is on the longevity of high growth rate and downside risk is the second order impact from a prolonged inflationary environment and geopolitical dislocation.</li>
</ul>
<p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>


IT index is up &gt;40% (mid-tier &gt;100%) over the past year, supported by (1) earnings upgrade of ~5% for tier-1 IT and ~20% for mid-tier IT and (2) IT index rerating from 23x to 28x
The absolute return potential for the sector is likely to be moderate (in line with earnings growth), basis: (1) growth reverting to medium-term baseline, (2) lower growth dispersion in FY23E as compared to FY22E, and (3) headwinds to multiple expansion based on increase in cost of capital &amp; geopolitical risk premium, inflationary factors, and the lead-lag cycle of cost and pricing
The upside risk is on the longevity of high growth rate and downside risk is the second order impact from a prolonged inflationary environment and geopolitical dislocation.

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Information Technology: Moderating, yet Strong

<p><strong>Infosys</strong>: We maintain BUY on Infosys (INFY), following the decade best Q1 growth and a strong growth outlook. Revenue growth guidance for FY22E was increased to 14-16% CC (12-14% earlier) and the EBIT margin band was maintained at 22-24% (despite the near-term supply crunch). INFY’s growth trajectory remains strong, supported by (1) a strong deal pipeline (higher QoQ), release in pent-up demand to restart the delayed projects, and sustainable improvement in large deals (USD 9.8bn TTM new large deal wins); (2) momentum across verticals – BFSI (nine large deals in Q1 vs six in Q4), retail, manufacturing, life-science and utilities, notwithstanding the lower net-new bookings; (3) structural operational pivots of offshoring and utilisation mitigating the near-term impact from higher sub-contracting; (4) uptick in fresher onboarding (35k in FY22 vs. 25k planned earlier and 21k in FY21) towards demand fulfilment and offsetting the near-term attrition surge. We remain positive on INFY (top pick in tier-1 IT) with &gt;13% EPS CAGR and &gt;40% RoIC valuing the company at INR 1,730, based on 28x Jun-23E EPS.</p>
<p><strong>L&amp;T Technology Services</strong>: We maintain REDUCE on L&amp;T Technology Services (LTTS), despite a slightly better Q1 revenue performance. Revenue guidance has been increased to 15-17% growth for FY22 (13-15% earlier), which implies a decelerated trajectory of 2-3% CQGR (as compared to 4.2% QoQ delivered in Q1FY22), despite a base benefit (FY21 at -6%). Two wins with TCV &gt;USD 25mn (similar to Q4) will support growth in the transportation vertical. LTTS' historical volatility in the large accounts bucket (&gt;USD 20mn accounts) and volatility due to variability in segmental operating profile are reflected in the growth guidance of ~800bps below its strongest year.</p>
<div class="content-highlight"><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></div>

Infosys: We maintain BUY on Infosys (INFY), following the decade best Q1 growth and a strong growth outlook. Revenue growth guidance for FY22E was increased to 14-16% CC (12-14% earlier) and the EBIT margin band was maintained at 22-24% (despite the near-term supply crunch). INFY’s growth trajectory remains strong, supported by (1) a strong deal pipeline (higher QoQ), release in pent-up demand to restart the delayed projects, and sustainable improvement in large deals (USD 9.8bn TTM new large deal wins); (2) momentum across verticals – BFSI (nine large deals in Q1 vs six in Q4), retail, manufacturing, life-science and utilities, notwithstanding the lower net-new bookings; (3) structural operational pivots of offshoring and utilisation mitigating the near-term impact from higher sub-contracting; (4) uptick in fresher onboarding (35k in FY22 vs. 25k planned earlier and 21k in FY21) towards demand fulfilment and offsetting the near-term attrition surge. We remain positive on INFY (top pick in tier-1 IT) with &gt;13% EPS CAGR and &gt;40% RoIC valuing the company at INR 1,730, based on 28x Jun-23E EPS.
L&amp;T Technology Services: We maintain REDUCE on L&amp;T Technology Services (LTTS), despite a slightly better Q1 revenue performance. Revenue guidance has been increased to 15-17% growth for FY22 (13-15% earlier), which implies a decelerated trajectory of 2-3% CQGR (as compared to 4.2% QoQ delivered in Q1FY22), despite a base benefit (FY21 at -6%). Two wins with TCV &gt;USD 25mn (similar to Q4) will support growth in the transportation vertical. LTTS' historical volatility in the large accounts bucket (&gt;USD 20mn accounts) and volatility due to variability in segmental operating profile are reflected in the growth guidance of ~800bps below its strongest year.
Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

HSIE Results Daily (Technology Services): Infosys, L&T Technology Services

Equity Bottom-Up

L&T Technology Services / Equity Bottom-Up

<ul><li>We visited L&amp;T Technology Services’ (LTTS) Baroda ODC and labs, which included several customer case studies</li><li>LTTS’ key differentiation as a pure-play ER&amp;D services company is not just at the intersection of IT and OT, but more so in its strong domain capabilities, end-to-end ER&amp;D services and strengths in verticals such as industrial product and plant engineering</li><li>LTTS’ recurring revenue streams from large accounts (currently 57 of T100 global R&amp;D spenders are clients) as well as new logo entry is supported by its deep engineering expertise and investment in labs (enabling pilot projects and innovation)</li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

We visited L&amp;T Technology Services’ (LTTS) Baroda ODC and labs, which included several customer case studiesLTTS’ key differentiation as a pure-play ER&amp;D services company is not just at the intersection of IT and OT, but more so in its strong domain capabilities, end-to-end ER&amp;D services and strengths in verticals such as industrial product and plant engineeringLTTS’ recurring revenue streams from large accounts (currently 57 of T100 global R&amp;D spenders are clients) as well as new logo entry is supported by its deep engineering expertise and investment in labs (enabling pilot projects and innovation)Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

L&T Technology Services: Medium-Term Growth Trajectory Priced In.

External broker reports(aggregated public sources), Axis Direct

Axis Direct

Axis Direct is the flagship brand under Axis Securities Limited, a subsidiary of Axis Bank in India. 

Content available is external broker reports authored by a third party outside the Smartkarma network and has been aggregated by an online aggregator through publicly available sources and is displayed by Smartkarma in this format for user's convenience and general informational purposes only. Content does not constitute investment or financial advice and Smartkarma makes no representation or warranty regarding its accuracy or contents. Original third party author retains all copyright and other proprietary rights in the content. Access or use of third party links not controlled by Smartkarma are at the user's own risk.

<ul><li>Accenture reported robust Q2FY23 numbers which stood above street expectations.</li><li>Revenue for the quarter stood at $15.8 Bn, posting an encouraging growth of 5% YoY in USD and 15% in local currency despite rising pressures of slowdown and increasing interest rates.</li><li>Beating the street expectation of revenue growth, the company’s operating margins also improved by 10bps to 13.8%.</li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

Accenture reported robust Q2FY23 numbers which stood above street expectations.Revenue for the quarter stood at $15.8 Bn, posting an encouraging growth of 5% YoY in USD and 15% in local currency despite rising pressures of slowdown and increasing interest rates.Beating the street expectation of revenue growth, the company’s operating margins also improved by 10bps to 13.8%.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Accenture - Results Beat Expectations Albeit with Lower Guidance

India

L&T Technology Services (LTTS) is an Indian multinational technology company specializing in Engineering Research and Development (ER&D) services. It offers consultancy, design, development, and testing services across various industries including automotive, medical devices, telecom, and industrial products. LTTS is headquartered in Vadodara, India, and was founded in 2012.

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L&T Technology Services (LTTS IN)

IT Sector - Decoding Signal from Noise

In this note, we decode the signal from noise and probe some key questions: (1) How structural is the demand and how correlated is it to the macros...

HDFC Securities

Information Technology: Moderating, yet Strong

IT index is up >40% (mid-tier >100%) over the past year, supported by (1) earnings upgrade of ~5% for tier-1 IT and ~20% for mid-tier IT and...

HDFC Securities

HSIE Results Daily (Technology Services): Infosys, L&T Technology Services

We maintain REDUCE on L&T Technology Services (LTTS), despite a slightly better Q1 revenue performance. We maintain BUY on Infosys (INFY),...

HDFC Securities

L&T Technology Services: Medium-Term Growth Trajectory Priced In.

LTTS’ key differentiation as a pure-play ER&D services company is not just at the intersection of IT and OT, but more so in its strong domain...

HDFC Securities

Accenture - Results Beat Expectations Albeit with Lower Guidance

Revenue for the quarter stood at $15.8 Bn, posting an encouraging growth of 5% YoY in USD and 15% in local currency despite rising pressures of...

Axis Direct

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