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MOrning India (5/July/18) Today’s top research idea Technology Preview 1QFY19: Expect polarization in seasonally strong quarter ** The trend of revenue growth acceleration of past two of quarters across our co

MOrning India (5/July/18): 1. Technology 1QFY19 Preview; 2. Bulls & Bears: India Valuations Handbook; 3. Ecoscope; 4. Titan Industries ; 5. Shriram Transport Fin.; 6. Gujarat Gas; 7. Oberoi Realty; 8. Shriram City Union Fin.; 9. EcoScope

 

Today’s top research idea

Technology Preview 1QFY19: Expect polarization in seasonally strong quarter

• The trend of revenue growth acceleration of past two of quarters across our coverage universe on YoY constant currency basis should continue into 1QFY19 as well. However, this should be without material recovery in the troubled large money banks in the US. Strong 2HFY18 deal wins across other verticals should drive this growth. Additionally, while INR depreciation should bode well for margins, lower hedge gains should dilute its impact on PAT.
• Bottoming cyclical pressures and improved capital allocation are factors that will feed into valuation multiples favorably. Currency keeps earnings growth ticking further. That said, many stocks demonstrating the impact on earnings and increasing payouts already appear expensive. From a mid-to-long-term perspective, we prefer INFO and TECHM; WPRO appears to be an attractive tactical bet on valuations. Among the Tier-II names, we prefer MTCL, PSYS and ZENT.

Piping hot news

Modi government approves hike in MSP for Kharif crops

• The Cabinet has approved a steep rise in the minimum support price of crops, giving farmers the promised 50% return on input costs, a politically astute move that can ease farm distress and boost rural demand if implemented effectively, but it can also stoke inflation.