External broker reports(aggregated public sources), Axis Direct

Axis Direct

External broker reports(aggregated public sources)

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.

Thematic (Sector/Industry)

<ul><li>Inflated attrition levels: Exponential rise in the demand for services led to a higher attrition rate and higher wages (employee expenses) in the last few quarters, reducing the operating margins in the process.</li><li>Moreover, we believe the IT service industry is facing short-term challenges.</li><li>These factors are prompting several IT services companies to cut the variable pay of mid to senior levels for the current fiscal to maintain the operating margins.</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>

Inflated attrition levels: Exponential rise in the demand for services led to a higher attrition rate and higher wages (employee expenses) in the last few quarters, reducing the operating margins in the process.Moreover, we believe the IT service industry is facing short-term challenges.These factors are prompting several IT services companies to cut the variable pay of mid to senior levels for the current fiscal to maintain the operating margins.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.

External broker reports(aggregated public sources), HDFC Securities

HDFC Securities

HDFC securities is the best online trading platform for stocks, IPOs, mutual fund 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.

<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.

External broker reports(aggregated public sources), Nirmal Bang

Nirmal Bang

A Relationship Beyond Broking

Nirmal Bang, one of the leading stock broking companies in India, caters to retail and institutional clients by offering them a range of financial products and services, including equities, derivatives, commodities, currency derivatives, mutual funds, IPOs, insurance, depository services and PMS.

Nirmal Bang is drawn from a diversity of professional backgrounds, and blend of experience, skill and dedication is shared with its clients. Nirmal Bang emphasizes adequate, thorough research local and world-wide developments, balancing these with the astute discovery of intrinsic values, synergies and growth. The aim is simply to help the investors to maximize their returns.

<div><div><div><div><ul><li>4QFY22 key takeaways: While the revenues were broadly in line with expectations, supply-side challenges meant that margins disappointed.</li></ul><div><div><div><div><ul><li>A massive margin regime change on the cards in FY24, but this will not mean much from a stock performance perspective in the next 12 months:</li></ul><div><div><div><div><ul><li>Tier-2 could face significant risks in the new environment: We fear Indian Tier-2 IT would suffer more because of vendor consolidation under the pressured profit picture for customers, a less diversified revenue mix (client, service line, vertical), which could throw up negative growth surprises, and a larger exposure to non-Global 1000 clientele whose profits are more vulnerable in the current challenging macro environment. Indian Tier-2 IT is now at a PE premium of ~20% to Tier-1 from a discount of 14% on 1st January, 2020.</li></ul></div></div></div></div></div></div></div></div></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>

4QFY22 key takeaways: While the revenues were broadly in line with expectations, supply-side challenges meant that margins disappointed.A massive margin regime change on the cards in FY24, but this will not mean much from a stock performance perspective in the next 12 months:Tier-2 could face significant risks in the new environment: We fear Indian Tier-2 IT would suffer more because of vendor consolidation under the pressured profit picture for customers, a less diversified revenue mix (client, service line, vertical), which could throw up negative growth surprises, and a larger exposure to non-Global 1000 clientele whose profits are more vulnerable in the current challenging macro environment. Indian Tier-2 IT is now at a PE premium of ~20% to Tier-1 from a discount of 14% on 1st January, 2020.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.

Sector Update - Cut Target Prices yet Again; Customer Stress Shows up Earlier than Expected

Equity Bottom-Up

<ul><li>LTI and Mindtree announced their much-expected merger on 6th May, (LTIM) will be the new India heritage IT player.</li><li>If current execution of both companies holds up, we think it could outpace Tier-1 set growth over the next 10 years.</li><li>Also, with both revenue and cost synergies, we believe there is potential for net margin gap between LTIM and TCS/Infosys (currently at 300-500bps) to narrow, leading to faster than pe...(continued).</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>

LTI and Mindtree announced their much-expected merger on 6th May, (LTIM) will be the new India heritage IT player.If current execution of both companies holds up, we think it could outpace Tier-1 set growth over the next 10 years.Also, with both revenue and cost synergies, we believe there is potential for net margin gap between LTIM and TCS/Infosys (currently at 300-500bps) to narrow, leading to faster than pe...(continued).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.

LTI-Mindtree: To Eat More from Tier-2 Plate near Term

<div><div><div><div><ul><li>Strong complimentary credentials: LTI has strong credentials in client mining (USD 20mn+ and USD 1mn+ logos have doubled in five years) and it has scaled competencies (SAP, AWS, Temenos) significantly, supported by improved tiering in partnerships and strong solutioning (MOSAIC, Leni).</li></ul><div><div><div><div><ul><li>Risk mitigation is work in progress: In our opinion, there are risks of senior level and high-performer attrition in a tight supply market and client attrition in short cycle deals, with possibility of increased competition.</li></ul><div><div><div><div><ul><li>While the companies have been operating under L&amp;T’s parentage, cultural alignment will be work in progress (MTCL scores slightly higher on some of the supply side metrics).</li></ul></div></div></div></div></div></div></div></div></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>

Strong complimentary credentials: LTI has strong credentials in client mining (USD 20mn+ and USD 1mn+ logos have doubled in five years) and it has scaled competencies (SAP, AWS, Temenos) significantly, supported by improved tiering in partnerships and strong solutioning (MOSAIC, Leni).Risk mitigation is work in progress: In our opinion, there are risks of senior level and high-performer attrition in a tight supply market and client attrition in short cycle deals, with possibility of increased competition.While the companies have been operating under L&amp;T’s parentage, cultural alignment will be work in progress (MTCL scores slightly higher on some of the supply side metrics).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.

India

Mindtree Limited is an international IT company. The Company delivers business and technology solutions through global software development. Mindtree develops applications to help companies enhance their enterprise operations. The Company also delivers product-development services and designs reusable building blocks for high-tech companies.

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Mindtree Ltd (MTCL IN)

IT Services - Near term challenge

These factors are prompting several IT services companies to cut the variable pay of mid to senior levels for the current fiscal to maintain the...

Axis Direct

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

Sector Update - Cut Target Prices yet Again; Customer Stress Shows up Earlier than Expected

Just 40 days post our downgrade of the IT sector to ‘underweight’, we have reduced target prices yet again and have moved our entire coverage...

Nirmal Bang

LTI-Mindtree: To Eat More from Tier-2 Plate near Term

LTI and Mindtree announced their much-expected merger on 6th May, (LTIM) will be the new India heritage IT player. If current execution of both...

Nirmal Bang

Information Technology - Two to Tango

Mindtree (MTCL) will merge into L&T Infotech (LTI) to form the amalgamated entity ‘LTIMindtree’ in a deal that has been widely speculated and...

HDFC Securities

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