Companies & Sectors
Muted quarter for IT sector
Expect low single digit growth from the IT majors
 
The quarterly results season is back and all eyes will be on the quarterly results of the information technology (IT) sector, which accounts for around 16% of the market capitalisation of CNX Nifty, making it a keenly watched sector. A research report by Edelweiss expects that majority of the large-cap IT companies will show modest revenue growth on a quarter-on-quarter (q-o-q) basis. It anticipates that large-cap IT companies will post revenue growth of 0.4 - 3.0% in constant currency (CC) terms and -0.2% to 2.5% in US dollar terms during fourth quarter of FY2016. Religare Capital Research too estimates muted revenue growth of -0.7% to 3.2% in US dollar terms. On an overall basis, Religare expects Q4FY15-16 to be a weak quarter for the IT sector on a sequential quarter basis. On the mid-cap front too, Religare sees weak organic performance from mid-caps.  
 
 
Edelweiss expects the EBITDA margins of all the IT companies except Tech Mahindra to expand on a q-o-q basis. The margins of Tech Mahindra are expected to remain the same. “The margin expansion will be on account of two reasons. Firstly, it is on account of sharp depreciation of rupee to the US dollar by 2.3% on a q-o-q basis. Secondly, due to low base effect as earlier quarter results were influenced by Chennai floods and weak seasonality,” Religare says.
 
On the other hand, Religare expects EBIT margins of Infosys, TCS and HCL Tech to remain flat on a q-o-q basis. It expects margins of Tech Mahindra to decline by 77 basis points (bps), while margins of Wipro to expand by 47 basis points. The IT sector has been to some extent, aided by rupee depreciation in the last 2 years. The Indian rupee has depreciated by more than 10% to around 66.2 to an US dollar in Q4FY15-16 from around 59.9 in Q4FY13-14.
 
Edelweiss expects a robust guidance of 12-14% by Infosys in its constant currency growth and positive commentary on demand by TCS. It would be interesting to note the extent of trimming of non-core part of Lightbridge Communications Corp (LCC) business by Tech Mahindra. Tech Mahindra had acquired US-based global telecom network services provider LCC in late 2014.
 
Edelweiss expects the revenue growth of companies taken up for research in the report to be in single digits on a q-o-q, with the exception of InfoEdge. It expects Info Edge's revenue growth to be 16% y-o-y, while its EBITDA margin is expected to grow by 470 basis points to 36% from 31.3% due to growth of its flagship business Naukri.com. InfoEdge is trading at a premium price-to-earnings (PE) multiple of 56. It expects the revenues of Eclerx to grow by 40.7% y-o-y, while its corresponding PAT to grow by 72.1%.
 
The IT Index has slightly outperformed the benchmark index in calendar year 2016. The CNX IT index has been nearly flat in 2016 as compared to a fall of more than 4% for the benchmark index. Among the large-cap IT companies, Infosys has been a clear outperformer with it delivering around more than 10% returns in 2016. Though HCL Tech has been a laggard in 2016, it rose on Monday by 2.35% to Rs840 on news that it has agreed to buy out shares of mid-cap IT firm Geometric for $200 million in a share swap deal. Correspondingly, Geometric rose by around 19% on Monday. Coming to mid-cap IT companies, most of them have underperformed the benchmark Sensex in 2016. These include MindTree, KPIT Cummins, NIIT Technology and Oracle Financial Services Software. Mphasis has marginally outperformed the Sensex. 

User

Jio soft launch this month, full roll-out by December: UBS
Mumbai : Amid speculation over the actual date of the roll-out of Reliance Jio 4G telecom services, a top global financial services firm, UBS, said while soft launch was expected by the end of this month, the full commercial offering was expected by December.
 
"Contrary to market belief that Jio has started rolling out 4G SIMs commercially, our channel checks in Mumbai and Delhi suggest that although SIMs have been shipped to the retail outlets, they are not yet available for sale," the consultancy said in a report.
 
"At present, Jio SIM cards are only available to Reliance employees, post its beta launch in December 2015. Our speed test on trial SIM cards in Reliance outlets indicate network speed of 18-20 Mbps versus Vodafone's 4G speed of 8-10 Mbps."
 
The report said Jio was expected to initially roll-out bundled 4G offering on a limited basis with LYF-branded devices -- as also SIM sale on standalone basis -- only in the second half of 2016, even as all the market leaders have already launched theirs.
 
Airtel was the first to launch 4G giving it a significant first-mover advantage with footprint in 15 circles, Idea started in 575 towns across its 10 circles, while Vodafone is has a presence in five circles. 
 
"We believe the delay in Jio launch has helped market leaders to strengthen their 4G offerings," said the report, adding while also suggesting that the market may be overly concerned over Jio's disruptive impact and ignoring rapid data growth in Indian mobile market.
 
The report forecast the Indian data market to grow nine times to $38bn by 2026.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

User

Low availability, growing demand pose water challenges for Indians
New Delhi : India faces major challenges in the water sector with the per capita availability going down and demand growing due to urbanisation and industralisation.
 
Inefficiency of water use in agriculture, over-exploitation of underground water and contamination are other issues associated with water management in the country.
 
India receives average rainfall of about 1,170 mm which corresponds to an annual precipitation of about 4,000 BCM (billion cubic metres) including snowfall. However, there is considerable variation in rainfall both temporally and spatially.
 
Nearly 75 percent of the annual precipitation occurs during the monsoon season between June and September. After accounting for evaporation, the average annual water availability in the country has been assessed as 1,869 BCM. It has been estimated that owing to topographic, hydrological and other constraints, the utilisable water is 1,123 BCM which includes 690 BCM of surface water and 433 BCM of replenishable ground water.
 
Since the amount of water available is more or less constant, rising demands due to increasing population and economic growth are expected to strain the demand-supply balance.
 
According to a report by the 2030 Water Resources Group, India's water requirement will be about 1,498 BCM in 2030, which is double of the estimated aggregate water demand at present. But water balances for the country as a whole are of limited value since they hide the existence of areas of acute water shortage and do not reflect problems of quality.
 
The twin indicators of water scarcity are per capita availability and storage. India's population has increased from 361 million in 1951 to 1.21 billion in 2011 and the per capita availability of water for the country as a whole has decreased from 5,177 cubic metres per annum in 1951 to 1,545 cubic metres per annum in 2011, a reduction of about 70 percent.
 
This meets the definition of a water-stressed condition - per capita availability of less than 1,700 cubic metres. The average per capita availability was 1,816 cubic metres according to 2001 census.
 
Nine out of 20 river basins, with an estimated population of 200 milllion, are estimated to be facing water scarcity conditions.
 
The per capita water storage capacity in India has been assessed at 209 cubic metres while it has been estimated at 5,686 cubic metres in Russia, 3223 cubic metres in Australia, 416 cubic metres in China and 2,192 cubic metres in the United States.
 
The annual extraction of groundwater in the country is by far the highest in the world and the growing dependence on this has led to over-extraction, which is lowering the water table in many parts of the country.
 
The annual ground water withdrawal for domestic and industrial purpose is estimated at 9.27 percent while it is estimated at 90.73 percent for irrigation.
 
According to official data, around 84 per cent of the total addition to the net irrigated area has come from groundwater over the last four decades. With an estimated 30 million groundwater structures in play, groundwater is being exploited beyond sustainable levels.
 
A NASA assessment showed that between 2002 and 2008, India recorded a decline in the water table to the extent of 0.33 metres per annum.
 
The ground water monitoring data of Central Ground Water Board (CGWB) for pre-monsoon 2014, compared with decadal mean of pre-monsoon (2004-2013), showed that out of total wells analyzed, around 39 percent showed a decline in the ground water level. According to an assessment done in 2011, nearly a sixth of the 6,607 assessment units (blocks/ mandals/ talukas/ districts) across 15 states and two union territories have been categorised as "over-exploited".
 
Also, water use efficiency in agriculture, which consumes around 80 percent of water resources, is estimated at around 38 percent, which compares poorly with 45 percent in Malaysia and Morocco and 50-60 percent in Israel, Japan, China and Taiwan.
 
Ground water quality data monitored by the CGWB shows that the ground water in parts of 20 states is contaminated by fluoride and in 21 states by nitrate in excess of World Health Organization (WHO) guidelines.
 
Organic pollution has been identified as a predominant cause of water pollution. The Central Pollution Control Board has assessed the total volume of municipal waste water generated in the country at 61,948 MLD (million litres per day) against the installed sewage treatment capacity of 23,277 MLD - leaving a gap of more than 38,671 MLD.
 
India's urban population has grown from 27.8 percent, according to 2001 census, to 32.16 percent, as per the 2011 census.
 
The National Water Policy, released in 2012, calls for planning and management of water resources through common integrated perspective considering regional and national context and on an environmentally sound basis.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

User

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)