MOSL: Morning India (06/July/17)-1. Technology 1QFY18 Preview (Falling short of the hoped-for traction)-2. India Electricals (EESL order tracker)
​MOrning India (06/July/17): 1. Technology 1QFY18 Preview (Falling short of the hoped-for traction); 2. India Electricals (EESL order tracker)
Today’s top research theme
Technology: Falling short of the hoped-for traction; Anticipated BFSI-led acceleration may have to wait
1QFY18 is crucial, given the importance it holds in determining the potential acceleration in FY18 growth. Strength was expected on the backdrop of positive BFSI undertones at the beginning of the fiscal. One quarter down, our conversations with multiple companies indicate that this has not played out as hoped.
Moreover, the INR appreciated ~3% v/s the USD in 1QFY18. Despite TCS being the only company this quarter among the top tier with wage hike implementation, we notice YoY margins under pressure across the board.
Valuations drive our preference for INFO, TECHM and HCLT among the top tier, while we do not expect any meaningful triggers for TECHM in 1Q. Among tier-II, we prefer PSYS (onset of margin improvement), CYL (play on engineering services), LTI (strong momentum), and ZENT (full-scale transformation)..
Piping hot news
Bharti Airtel open to selling bigger chunk of tower arm Bharti Infratel
Bharti may revive a plan to sell a controlling stake in tower arm Bharti Infratel in an effort to pare over $14 billion of debt and release funds for network expansion, people familiar with the matter said.
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