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MOSL: Morning India (12/March/19)-1. TCS (Transformative capabilities allowing choice of higher value); 2. Utilities (Gujarat invites bids ending drought in LT PPA market); 3. Metals Weekly

MOrning India (12/March/19): 1. TCS (Transformative capabilities allowing choice of higher value); 2. Utilities (Gujarat invites bids ending drought in LT PPA market); 3. Metals Weekly (Indian steel prices largely stable)

 

Today’s top research idea

TCS: Transformative capabilities allowing choice of higher value; Impact from supply situation minimal; macro good, but caution merited for CY19

• While growth momentum remains intact for now (barring Automotives and Hi-tech), one needs to be cautious on the likelihood of the same sustaining through the course of CY19. As incremental growth in recent years has tapped into business budgets (and not just CIO’s), the coupling with clients’ business fortunes is higher. While this means greater stickiness, it also implies coupling with customers’ business cycles.
• TCS’ prowess in Transformative Digital deals helps it win large deals that have greater value than cost takeout engagements. This also drives its comfort in sustained growth over the medium-to-long term. The recent uptick in sub-contractor expenses was a function of excess demand in a seasonally weak quarter than the supply planned, and hence, it should correct over time, and outlook of 26-28% EBIT margin is intact.

Piping hot news

Standard Chartered, Ruias to appeal in NCLAT against Essar order

• Standard Chartered Bank, the third-largest secured financial creditor of Essar Steel, has decided to file an appeal before the National Company Law Appellate Tribunal (NCLAT) against the Ahmedabad bankruptcy court order that last week awarded the asset to ArcelorMittal at the end of marathon insolvency proceedings.