In spite of the uncertainty in global demand for information technology companies and the weakening rupee, top companies in India are expected to maintain their investment grade ratings
The top Indian information technology (IT) companies, Tata Consultancy Services (TCS), Infosys and Wipro are likely to maintain their investment-grade ratings even if demand weakens. This is according to the report that Standard & Poor's Ratings Services has recently published, Big Three Indian IT Companies Are Well Programmed To Handle Uncertain Demand. The ratings of the "Big Three" companies are TCS (TCS; BBB+/Stable/--); Infosys (BBB+/Stable/--) and Wipro (BBB/Positive/--).
“The largest Indian IT companies have strong margins, are cost-competitive, and have proven delivery models. These attributes will help them to weather uncertain and volatile demand,” said Standard & Poor’s credit analyst Abhishek Dangra.
The report suggests that the three leading Indian IT companies will be able to grow at a faster pace than the global industry, at least over the next few years. S&P expects these companies to maintain industry-leading EBITDA margins and grow in double digits in the next 12 months.
The bigger challenges for the Indian IT companies will occur in the longer term. It is expected that the cost advantages of these companies will diminish as foreign competitors increase their already-large employee bases in India. Moreover, business and reputation risk is rising due to increasing protectionism. But it is expected that the three largest Indian IT companies will adapt to the challenges, as they have in the past.
The report says that companies also face issues such as dependence on the slowing economies of the US and Europe, visa issues, rising wages in India, and foreign exchange volatility. The sovereign budget cuts across the US and Europe could hurt business sentiment and lower private-sector IT spending. Though deal cancellations are not as significant as they were in 2008-2009, the time it takes to close deals has lengthened.
“High unemployment rates, slowing growth, and political activism in many countries are generating opposition to outsourcing,” said Mr Dangra. “Still, we expect focus on cutting costs in a slowing global economy to support demand for outsourcing to India. Such a practice results in significant cost savings.”
The sluggish global economy will apply pressure on pricing for Indian IT companies on export orders. But simultaneously, the weakening rupee against the dollar and the euro will improve margins to push for a mixed outlook for these companies. TCS and Infosys have deals in the pipeline for overseas orders and are not as sharply affected by the slowing economies abroad. Customers abroad are likely to embrace new technology and TCS is likely to win high-tech orders, where pricing pressure is not severe. Wipro, which has reorganised its management this year, will face some pressure on new deals and consequently revenues. But it is expected to have a healthy bottom-line.
Hiring plans are likely to be hit in top IT companies, as they move to higher wages for existing good performers and experienced new recruits. Engineering colleges and management institutes, which have many aspiring software engineers, may be adversely affected in the forthcoming placement season in terms of number of students recruited by the IT industry.
TCS is likely to improve at a greater rate and may even outpace Infosys and Wipro. TCS recorded an average sales growth of 33% during the previous three quarters, last one ending in June 2011. Its market cap to operating profit ratio is 20.1, while its return on net worth based on annualised net profit of the past three quarters is an exceptional 51%. It has a unique Global Network Delivery Model and has 1,98,500 consultants in 42 countries.
Lower-rung IT companies may face the pinch on pressure on pricing and consequently, profits.
First-day collections of Salman-starrer above the Shah Rukh sci-fi futuristic blockbuster, but Ra.One rakes it on Diwali with Rs62.50 crore
Shah Rukh Khan’s ‘Ra.One’ was the most awaited mega-movie of 2011. Not only because it had King Khan as a sci-fi hero, but because it was another chapter in the clash-of-the-titans saga in Bollywood. Can the King beat Sallubhai?
As far as the opening collections go, ‘Bodyguard’ still rules the roost. However, King Khan’s humanoid avatar has put up a marvellous show. As Eros International, the distributor for ‘Ra.One’ has said, Diwali sales have amounted to Rs62.50 crore.
“‘Ra.One’ grossed Rs26.50 crore with a net of Rs18.50 crore on 26th October (Wednesday), making it the highest-ever Diwali day collection in the history of Indian cinema. The second day collections on 27th October were even more impressive with the film raking in Rs36 crore gross with a net of Rs25.10 crore, making it the highest collection ever on a single day for an Indian film,” Eros said. ‘Ra.One’ opened across more than 4,000 plus screens worldwide (3,100 plus screens in India and 904 prints internationally, including 3D, Tamil and Telugu).
That is definitely something to look out for, and ‘Ra.One’ needs to deliver. Not only because it has to recover its massive Rs150 crore budget; but King Khan has to prove a point to his archrival. Salman Khan had delivered three successive super-hits with ‘Dabangg’, ‘Ready’ and ‘Bodyguard’. The last one had broken all box-office records, and on the first day of its release on Eid, it amassed a huge Rs21.50 crore—which is still the largest first-day haul.
‘Bodyguard’ opened across 2,250 screens in 70 Indian cities and with 482 prints across overseas territories. Along with ‘Singham’, it revived Reliance Entertainment’s fortunes, which had taken a beating with duds like ‘Kites’, ‘Raavan’ and ‘Haunted’.
‘Bodyguard’ surpassed Sallubhai’s own ‘Dabangg’ with its Rs213 crore collection; which had, in turn, beat Aamir Khan’s mega-cult hit ‘3 Idiots’. With Salman on a roll, and Aamir maintaining a mysterious silence over his next mega-project—while churning out another cult-hit and a critical success, ‘Delhi Belly’—King Khan had to come back with a bang.
The hype had started about a year ago, and the actor-producer had devoted himself fully to his dream project after the success (ahem) of ‘My Name is Khan’. Shah Rukh has reigned over foreign screens; having a massive fan base among NRIs and diehard fans of Indian melodramatic family sagas and romances. The domestic scene, especially the single screens, however, belongs to Salman. ‘Dabangg’ was not only a huge hit, it was a wake-up call for filmmakers who had underestimated the power of single-screens. No wonder, following ‘Dabangg’, we are seeing a return of the unapologetic over-the-top masala entertainers.
‘Ra.One’ opened to savage reviews, but nevertheless, fans flocked to root for the baadshah of Bollywood. And when had critical opinion mattered when it came to the King and Sallubhai? This battle is going to be epic.
Garden Silk Mills had posted a net profit of Rs25.26 crore for the quarter ended 30 September 2010
Garden Silk Mills has reported a 62.35% decline in its net profit for the second quarter ended 30 September 2011 to Rs9.51 crore over the same period last fiscal.
The company had posted a net profit of Rs25.26 crore for the quarter ended 30 September 2010, Garden Silk Mills said in a filing to the BSE.
Net sales stood at Rs1,072.50 crore during the quarter under review compared with Rs887.18 crore in the corresponding period previous fiscal, it added.
In the late afternoon, Garden Silk Mills was trading at around Rs75 per share on the Bombay Stock Exchange, 0.74% up from the previous close.