MOSL: Morning India (04/April/19): 1. Technology 4QFY19 Preview; 2. India Politics (Gauging the people’s pulse); 3. Financials; 4. Bulls & Bears - April 2019 (India Valuations Handbook); 5. Amara Raja Batteries
MOrning India (04/April/19): 1. Technology 4QFY19 Preview (Tier-I marches on); 2. India Politics (Gauging the people’s pulse); 3. Financials; 4. Bulls & Bears - April 2019 (India Valuations Handbook); 5. Amara Raja Batteries (JV with JC terminated)
Today’s top research theme
Technology 4QFY19 Preview: Tier-I marches on; Account-specific stress to drag multiple Tier-II companies
- In 4QFY19, we expect aggregate INR revenue / EBITDA / PAT growth to be 17.7% / 18.1% / 12.6% YoY across our IT coverage universe. We expect the trend of unanimous acceleration to soften, with only INFO and HCLT likely to witness substantial acceleration.
- We expect HCLT to lead and TECHM to lag growth across tier-I. Across tier-II, we expect MPHL and NITEC to lead QoQ growth; while client-specific issues will drag revenues at LTI, PSYS, CYL, and TELX. Margins should decline at INFO due to back-ended nature of investments. Among tier-II companies, QoQ drop in margins is likely to be higher at PSYS and LTI.
- We prefer INFO in Tier-I and ZENT in Tier-II. Over the short-term, tactical valuation catch-up play is an opportunity for WPRO in tier-I and MPHL in teir-II.
Piping hot news
RBI MPC to decide on rate cut, change in policy stance today
- The Reserve Bank of India’s (RBI's) Monetary Policy Committee under governor Shaktikanta Das will announce its policy decision on Thursday. The market is expecting a cut in policy rates by 25 basis points ahead of the general elections, along with a change in policy stance to accommodative from neutral.
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