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Archive for the ‘Technology’ Category

Infosys valuations steadily sliding

Posted by fairval on April 16, 2012

Infy valautions have now come down to about 14x FY13x eps (Rs 160-170 range).

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This is now lower than TCS and Wipro.

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The question is – whether the structural change the IT services business, and more so Infy, is going through, is over. One repeatedly hears that the days of 30% plus EBITDA margin are over. 20-25% is more sustainable for IT Services. Infy is a long way away from there. Even TVS is around 29%.

So Infy may not be quite have reached the bottom of the trough yet. Though, rupee can save it for sometime, if it dives below Rs 55 in 2012.

Posted in Technology, Valuation | Leave a Comment »

Good reporting example – KPIT

Posted by fairval on March 15, 2012

Acquired company performance

Rare to see this kind of slide.

Posted in Corporate Governance, Technology | Leave a Comment »

3i Infotech in debt trouble – where’s the corporate governance

Posted by fairval on December 14, 2011

3i Infotech is in serious debt trouble, reports The Economic Times today.

Lenders, investors shun debt-laden 3i Infotech; prospect of distress sale looms

I had written earlier how 3i was a great example of a sleeping board (3i Infotech – An example of lax corporate governance) . Here, the chairman, CEO and CEO has unchanged for 8-10 years. It is clear they have practiced cowboy capitalism, and use public and borrowed funds, and run them to the ground. The destruction of other people’s money is simply amazing.

Yet, we have no change in leadership. How come these people havent been fired yet? Now, it appears the company is defaulting.

The ET story says: “The company has been facing a temporary cash flow issue as refinance is not happening on time for shorter maturity loans,” says V Srinivasan, managing director & global CEO of 3i.

3i Info was floated by ICICI Bank, and it no wonder it is still lending to 3i. The CEO is quoted saying “We have borrowedRs200 crore in long-term loans from ICICI Bank in October. Also, ICICI Bank is working on loan syndication for a long-term loan of Rs 300 crore. We are capable for paying the salaries through operations,” he adds

ICICI Bank is still the largest shareholder in 3i. Wonder if it is violating some RBI guidelines, or even corporate governance ethics, by continuing to support 3i at a time when no one wants to touch it. What’s it about ICICI, and corporate governance? The other company floated by it, First Source is in a similar mess.

 

 

 

Posted in Corporate Governance, Technology, What was that Again? | Leave a Comment »

Infosys PE will be under question now

Posted by fairval on April 16, 2011

Infy's likely FY12 trading range

Can Infy hold a PE of > 20x now?

Posted in Markets, Technology, Valuation | Leave a Comment »

TCS versus Infy, and TCS is winning

Posted by fairval on July 16, 2010

TCS versus Infy in recent quarters

(the columns in the middle are yoy change in %)

When it comes to large cap Indian IT, the question for investors, particularly large investors, is mainly which stock to own – Infy, or TCS/Wipro. Infy has always been the favorite. But shud it remain to be so?  U may want to ask if u see the above data.

This quarter TCS has overtaken in operating margins as well. Why is this happening? Dont have the explanation myself. What i hear from TCS is strong focus on costs, particularly since the new ceo has come in. Why are Infy margins plummeting tho?

Posted in Data, Stock Ideas, Technology | Leave a Comment »

What was that again? Markets overreact to HCL Tech news

Posted by fairval on November 23, 2009

Here’s one more in our ‘What was that Again?’ series. This one is an example of how markets will over react when their mood and direction are clearly set. These days the market is in a bullish mode, so it bumped HCL Tech a good 5.8% on what is perhaps a minor news.

HCL Tech has a market cap of around Rs 14,800 crore. So 5.8% of this is about Rs 850 crore. The news today was this –

Software services firm HCL Technologies on Monday said it won a contract worth $200 million from British insurer Equitable Life.

The contact begins in March 2011, HCL said in a statement, but the Indian firm would receive 8 million pounds ($13 million) by then as it begins work towards the implementation of the project, Stuart Drew, HCL’s senior vice president, financial services, told reporters on a conference call.

While the deal runs for 30 years, the bulk of the revenue would accrue in the first eight years, Drew said.  Equitable Life, Britain’s oldest mutual insurer with 1.5 million policyholders at its peak, closed to new business after it almost collapsed in 2000 after being forced to honour unsustainable guarantees stretching back 30 years.

So check this. The contract does not even start till FY12. Also, the $200mn is what HCL Tech will earn over 30 years. Even if it gets $160mn of it in 8 years, it is only $20mn or about Rs 100 crore a year. This means, it will earn a net profit of about Rs 20-30 crore a year from this contract (that too from FY12 maybe). Is it worth an extra Rs 850 crore?

Also, there is no gaurantee the company will be around in FY12 to honor the contract, considering it almost went under not in the too distant a past.

Posted in Markets, Technology, Valuation, What was that Again? | Leave a Comment »

Infy hits a wall

Posted by fairval on April 15, 2009

Infy isnt growing anymore, shows this chart from an Isec report. If u see total active clients, this number peaked 2 quarters ago. Again, global economy is contracting, so this is perhaps a result of this. But interesting to note that potential market for Indian IT isnt the limitless ocean it used to be.

Total clients not growing, and billing rates headed down (since clients are re negotiating).

More reason to be underweight Infy.

Posted in Markets, Technology | Leave a Comment »

Kite flying with IBM

Posted by fairval on November 26, 2008

In these depressed times, good to escape to the fantasy world. IBM issued a release today talking about the ‘Next Five’. This kind of stuff used to come out a lot around 2000/01. I suppose time for companies to start painting rosy picutres of the future. Anyway, here is what IBM says will be 5 tech-led cutting edge changes in next 5 years

Solar Energy: Energy saving solar technology will be built into asphalt, paint and windows Ever wonder how much energy could be created by having solar technology embedded in our sidewalks, driveways, siding, paint, rooftops, and windows? In the next five years, solar energy will be an affordable option for you and your neighbors. Until now, the materials and the process of producing solar cells to convert into solar energy have been too costly for widespread adoption. But now this is changing with the creation of “thin-film” solar cells, a new type of cost-efficient solar cell that can be 100 times thinner than silicon-wafer cells and produced at a lower cost. These new thin-film solar cells can be “printed” and arranged on a flexible backing, suitable for not only the tops, but also the sides of buildings, tinted windows, cell phones, notebook computers, cars, and even clothing.

Genome and Health: You will have a crystal ball for your health What if you could foresee your health destiny and use that knowledge to modify your lifestyle? Even though we are told that things like French fries, potato chips, cheese and wine aren’t good for us, what if you could find out specifically that you are someone who could consume more of those vices without having negative impact on your health? In the next five years, your doctor will be able to provide you with a genetic map that tells you what health risks you are likely to face in your lifetime and the specific things you can do to prevent them, based on your specific DNA – all for less than $200. Ever since scientists discovered how to map the entire human genome, it has opened new doors in helping to unlock the secrets our genes hold to predicting health traits and conditions we may be predisposed to. Doctors can use this information to recommend lifestyle changes and treatments. Pharmaceutical companies will also be able to engineer new, more effective medications that are targeted for each of us as individual patients. Genetic mapping will radically transform healthcare over the next five years and allow you to take better care of yourself.

Web Again (3.0?): You will talk to the Web . . . and the Web will talk back “Going” to the web will change dramatically in the next five years. In the future, you will be able to surf the Internet, hands-free, by using your voice – therefore eliminating the need for visuals or keypads. New
technology will change how people create, build and interact with
information and e-commerce websites – using speech instead of text. We know this can happen because the technology is available, but we also know it can happen because it must. In places like India, where the spoken word is more prominent than the written word in education, government and culture, “talking” to the Web is leapfrogging all other interfaces, and the mobile phone is outpacing the PC. In the future, through the use of “VoiceSites,” people without access to a personal computer and Internet, or who are unable to read or write, will be able to take advantage of all the benefits and conveniences the Web has to offer. And by the web becoming more accessible by using voice, it will become easier to use for everyone. Imagine being within a phone call’s reach from the ability to post, scan and respond to e-mails and instant messages – without typing. You will be able to sort through the Web verbally to find what you are looking for and have the information read back to you – as if you are having a conversation with the Web.

Social Networking: You will have your own digital shopping assistants Ever find yourself in a fitting room with all the wrong sizes and no salesperson in sight? And what about affirmation from friends that the outfit you’ve chosen truly does look good on you? In the next five years, shoppers will increasingly rely on themselves – and the opinions of each other – to make purchasing decisions rather than wait for help from in-store sales associates. A combination of new technology and the next wave of mobile devices will give the in-store shopping experience a significant boost. Fitting rooms soon will be outfitted with digital shopping assistants – touch screen and voice activated kiosks that will allow you to choose clothing items and accessories to complement, or replace, what you already selected. Once you make your selections, a sales associate is notified and will gather the items and bring them directly to you. You’ll also be able to snap photos of yourself in different combinations and email or SMS them to your friends and family for the thumbs up…or the thumbs down. Shoppers can access product ratings and reviews from fellow consumers and will even be able to download money-saving coupons and instantly apply them to their purchases.

Smart Appliances: Forgetting will become a distant memory. Information overload keeping you up at night? Forget about it. In the next five years, it will become much easier to remember what to buy at the grocery store, which errands need to be run, who you spoke with at a conference, where and when you agreed to meet a friend, or what product you saw advertised at the airport. That’s because such details of everyday life will be recorded, stored, analyzed, and provided at the appropriate time and place by both portable and stationary smart appliances. To help make this possible, microphones and video cameras will record conversations and activities. The information collected will be automatically stored and analyzed on a personal computer. People can then be prompted to “remember” what discussions they had, for example, with their daughter or doctor by telephone. Based on such conversations, smart phones equipped with global-positioning technology might also remind them to pick up groceries or prescriptions if they pass a particular store at a particular time. It’s not hard to imagine that TVs, remote controls, or even coffee table tops, can one day be the familiar mediums through which we tap into our digitally-stored information.

Posted in Technology | Leave a Comment »

3i Infotech – Continued strong growth

Posted by fairval on November 26, 2007

I-Sec recommends 3i Infotech in a recent report. The report projects around 35% or so earnings growth over next 2-3 years. The stock thus quotes at 9.6xFY09E eps, according to the report.

3i has 2 positives – less than a 3rd of its growth comes from US. Also, more than 50%of revenues are from products, which is a high margin business. Various brokerages have thus recommended 3i as a leading mid cap pick.

(Have held the stock for a while)

Posted in Stock Ideas, Technology | Leave a Comment »

IT/BPO – Indian firms rule rankings

Posted by fairval on February 3, 2007

36 Indian IT/BPO firms are part of GS100, an annual ranking exercise by Global Services magazine. US has 32, China 8. In the US number, many of the companies have large presence in India. (read story)

Some Indian companies in this list
24/7, Caliber Point, e4e, Etech, Exl Service, Innominds Software, Intelenet, marketRx, Mastek, Microland, Mindtree, Mistral, Polaris, Quest, Sierra Atlantic, Sonata, Summit HR Worldwide, Syntel, Transorks, WNS, Zensar. The rest are the usual supects like Infosys, TCS, Wipro etc.

Posted in Technology | Leave a Comment »

 
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