TMT: Krafton Inc, Nasdaq-100 Stock Index, Kakao Pay, Tata Consultancy Svcs, Wipro Ltd, Infosys Ltd and more

• We have been sceptical about Krafton’s valuation and ability to generate new hits since its listing. 
• After treading water close to its IPO price for five months the new year has seen the stock crater 25%. 
• In our view the bad news is just getting started and that is despite PUBG: Mobile still doing well in China and India.

• NDX is dangerously close to a meaningful break below macro trendline and price support that would induce downside pressure on supports in other key indices.
• NDX Pivot support break would set in motion a downward spiral in the DJI and SPX as well as the global risk cycle. On alert!
• Late January a weaker cycle for a washout that sets up a tender bullish February grind with Q1 topping signals maturing.

• In this insight, we discuss the end of lock-up periods for Kakao Pay, KakaoBank, Hyundai Heavy Industries, Krafton Inc, and SD Biosensor in 1Q 2022.
• Typically, investors tend to focus on the end of the lock-up periods in Korea about 1-2 months ahead of the actual end of these lock-up periods.
• Among these five companies, there are relatively large number of shares that could be sold post end of the lock-up periods for Kakao Pay and Kakao Bank in 1Q 2022. 

TCS reported 3QFY22 revenue of USD6.52b, up 4.0% QoQ in constant currency (CC) above our estimate of 3.2% QoQ growth. 3Q topline was driven by Communication, Technology and Regional markets, while Manufacturing and Retail verticals dragged down growth. EBIT margin contracted 60bp QoQ to 25.0%, 100bp lower than our estimate of 26.0%, as TCS augmented its employee intake (all-time high at 28k), along with a spike in sub-contracting cost.

• Tata Consultancy Services: TCS reported in-line revenue performance, while the margin was a miss
• Infosys: We maintain BUY on Infosys (INFY), following a significant beat in revenue (+7% QoQ CC vs. estimate of 4.4%) and a strong growth outlook.
• Wipro: Wipro delivered a muted performance in Q3; growth of 3.0% QoQ CC was below estimate and the lowest in the last five quarters

• Tata Consultancy Services Ltd (TCS) reported a 4.3% revenue growth QoQ in Q3FY22 in Rupee terms, much in line with our expectations
• The company’s revenues stood at Rs 48,885 Cr, up 16.3% YoY and 4.3% QoQ
• We recommend a HOLD rating on the stock and assign a 31x P/E multiple to its FY24E earnings of Rs 135.2/share to arrive at a TP of Rs 4,200/share

• Wipro Ltd’s (Wipro) revenue growth stood below our expectations at Rs 20,313 Cr, up 3.1% QoQ and 27% YoY in CC terms
• Operating profit grew robust 30.8% YoY to Rs 3,492 Cr, aided by better executions, better employee management and service mix
• We recommend a HOLD rating on the stock and assign a 27x P/E multiple to its FY24E earnings of Rs 27.7/share to arrive at a TP of Rs 750/share, implying an upside of 9% from CMP.

INFO reported a growth of 7% QoQ CC, ahead of our estimate of 4.8%, on the back of a broad based performance. Large deal TCV stood at USD2.53b (net new at 44%). The management indicated traction in large deals, and highlighting that the deal pipeline was the highest in a very long time. EBIT margin dipped only 10bp QoQ to 23.5%, in line with our estimate, despite a drag from employee additions (12.5k), higher sub-contracting, and…

• Wipro (WPRO) reported 3QFY22 IT Services revenue of USD2.64b (+3.0% QoQ CC), missing our estimate by 70bps
• We now expect FY22 IT Services revenue growth at 27.4% (18.5% YoY organic growth), down 100bps v/s the previous expectation.
• We lower our FY22–24E EPS estimate by 1% to factor in the miss on the growth front. We maintain our Neutral stance as we view the current valuation as fair

• Infosys Ltd (Infy) reported Q3FY22 revenue of Rs 31,867 Cr, up 7.7% QoQ and 7% QoQ (in CC terms)
• The company’s operating profit stood at Rs 7,484 Cr, reporting a growth of 7.3% on a QoQ basis
• We recommend a BUY rating on the stock and assign a 29x P/E multiple to its FY24E earnings of Rs 73.5/share to arrive at a TP of Rs 2,140/share