External broker reports(aggregated public sources), Nirmal Bang

Nirmal Bang

External broker reports(aggregated public sources)

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.

Thematic (Sector/Industry)

<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

<ul><li>We are downgrading Indian IT Services sector to underweight (UW) on a 12-month basis, though in the near term, there is relative earnings resilience against certain domestic sectors.</li><li>But, the likely 1HFY23 strength should be used to pare positions if overweight (OW), especially in expensive Tier-2 companies.</li><li>Nifty IT index is up ~144% from 1st Jan, 2020 till 31st March, 2022 while Nifty is up 44% (Nifty Bank up only 13%!)</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 are downgrading Indian IT Services sector to underweight (UW) on a 12-month basis, though in the near term, there is relative earnings resilience against certain domestic sectors.But, the likely 1HFY23 strength should be used to pare positions if overweight (OW), especially in expensive Tier-2 companies.Nifty IT index is up ~144% from 1st Jan, 2020 till 31st March, 2022 while Nifty is up 44% (Nifty Bank up only 13%!)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 Sector- Sector Update- Move to Underweight

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>IT Services sector is expected to report strong growth in Q4FY22 primarily on account of the new large deal wins and a ramp-up of deals won in the previous quarter despite seasonality furloughs</li><li>IT spending in North America and Europe has gained momentum and demand for digital transformation has increased exponentially</li><li>Furthermore, improved macro-economic opportunities across the globe are expected to provide further growth impetus to the sector moving forward</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 Services sector is expected to report strong growth in Q4FY22 primarily on account of the new large deal wins and a ramp-up of deals won in the previous quarter despite seasonality furloughsIT spending in North America and Europe has gained momentum and demand for digital transformation has increased exponentiallyFurthermore, improved macro-economic opportunities across the globe are expected to provide further growth impetus to the sector moving forwardContent 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.

IT: Supply-Side Constraints Persist; Demand Robust

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.

<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

Equity Bottom-Up

<ul><li>Persistent Systems (PSYS) is poised to sustain its outperformance with continued growth and margin improvement in the medium term</li><li>Key positives include (1) a strong pedigree in product engineering services that drives leadership in new spend areas, (2) consistency in deal velocity and growth drivers from large clients, (3) notable market-share gains against tier-1 competitors in several large deals, (4) recent additions to senior management aimed at enhancing business scalability, (5) margin drivers from utilisation, fixed price deals, and diversification in the offshore cost base.</li><li>We maintain BUY on PSYS (our preferred pick) with a target price of INR 8,530, based on a 35x FY26E valuation supported by a 28% EPS CAGR over FY24-26E. </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>

Persistent Systems (PSYS) is poised to sustain its outperformance with continued growth and margin improvement in the medium termKey positives include (1) a strong pedigree in product engineering services that drives leadership in new spend areas, (2) consistency in deal velocity and growth drivers from large clients, (3) notable market-share gains against tier-1 competitors in several large deals, (4) recent additions to senior management aimed at enhancing business scalability, (5) margin drivers from utilisation, fixed price deals, and diversification in the offshore cost base.We maintain BUY on PSYS (our preferred pick) with a target price of INR 8,530, based on a 35x FY26E valuation supported by a 28% EPS CAGR over FY24-26E. 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.

Persistent Systems: Outperformance to Continue. Maintain BUY

India

Persistent Systems is a global digital engineering and enterprise modernization company. It provides information technology and software engineering services, including software product engineering, cloud services, and data-driven solutions to clients across industries like banking, healthcare, and technology. The company was founded in 1990 and is headquartered in Pune, India.

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Persistent Systems (PSYS IN)

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

Information Technology Sector- Sector Update- Move to Underweight

We are downgrading Indian IT Services sector to underweight (UW) on a 12-month basis, though in the near term, there is relative earnings...

Nirmal Bang

IT: Supply-Side Constraints Persist; Demand Robust

IT Services sector is expected to report strong growth in Q4FY22 primarily on account of the new large deal wins and a ramp-up of deals won in the...

Axis Direct

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

Persistent Systems: Outperformance to Continue. Maintain BUY

We maintain BUY on PSYS (our preferred pick) with a target price of INR 8,530, based on a 35x FY26E valuation supported by a 28% EPS CAGR over FY24...

HDFC Securities

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