MOSL: MOrning India (6/January/20): 1. Technology (3QFY20 Preview: Modest expectations in a seasonally soft quarter); 2. Titan Company; 3. Consumer; 4. Oil & Gas; 5. Metals; 6. Future Retail; 7. Bulls & Bears
MOrning India (6/January/20): 1. Technology (3QFY20 Preview: Modest expectations in a seasonally soft quarter); 2. Titan Company; 3. Consumer; 4. Oil & Gas; 5. Metals; 6. Future Retail; 7. Bulls & Bears
Today’s top research idea
Technology (3QFY20 Preview): Modest expectations in a seasonally soft quarter
- In a seasonally soft quarter, we expect (1) higher-than-usual furloughs and (2) caution in key verticals (BFSI, Retail) to create further overhang on growth. Growth for Tier I, including inorganic contribution and cross-currency tailwind, should be 1.3%-3.5% QoQ (USD).
- We expect sequential margin improvement in most cases with utilization/mix improvement and INR depreciation being the key tailwinds.
- The impact of these could be partially offset by (1) fewer working days and (2) large deal ramp-ups in some cases. On an adjusted basis, we expect a sequential margin improvement of 0-90bp across Tier I.
- We will closely watch the commentary around (1) key verticals like BFSI and Retail, (2) deal wins and (3) attrition.
- We prefer Infosys and HCLT among large caps and LTI among mid-caps.
Piping hot news
DHFL gets creditors’ nod to resume lending operations
The committee of creditors (CoC) to Dewan Housing Finance Corp. Ltd (DHFL) has approved a plan under which the mortgage lender will resume advancing home loans beginning with ₹500 crore a month to arrest the decline in its loan book.
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