TCS Q1 result: Net profit at Rs 9,008 crore, revenue jumps to Rs 45,411 crore
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Moneycontrol
TCS Q1 Result: Net Profit At Rs 9,008 Crore, Revenue Jumps To Rs 45,411 Crore
Consolidated profit in March 2021 quarter was at Rs 9,246 crore and Rs 7,008 crore in June quarter last year.
Bulk Deal as on 08-07-21
Akash Infra Project
+ 1 Lk @ 228.43 Nishant Pitti
Asian Granito
- 1.85 Lk @ 180.73 Shruti Lodha
Gee Ltd
+ 1.25 Lk @ 90.04 Anirudh Mohta
Kelton Tech
- 23.23 Lk @ 63.75 Ankit Kothari
Walchandnagar
- 3.28 Lk @ 73.18 Vistra Itcl Ind Ltd
Akash Infra Project
+ 1 Lk @ 228.43 Nishant Pitti
Asian Granito
- 1.85 Lk @ 180.73 Shruti Lodha
Gee Ltd
+ 1.25 Lk @ 90.04 Anirudh Mohta
Kelton Tech
- 23.23 Lk @ 63.75 Ankit Kothari
Walchandnagar
- 3.28 Lk @ 73.18 Vistra Itcl Ind Ltd
*Tata Consultancy Services ltd.* | *CMP* Rs. 3257 | *M Cap* Rs. 1204797 Cr | *52 W H/L* 3400/2125
(Nirmal Bang Retail Research)
Order book ($ Bn ) came at $ 8.1 bn vs, QoQ $ 9.2 bn, YoY $ 6.9 bn
*Result is marginally below expectation*
CC Qoq came at 2.4% vs expectation of 3.7%, QoQ 4.2%
Lower growth is in account of impact of COVID in India. Core marke saw revenue growth of 5.2%
Dollar revenue came at $ 6154 Mn,(2.8% QoQ, 21.6% YoY) vs expectation of $ 6217.9 Mn, QoQ $ 5989 Mn, YoY $ 5059 Mn
Net sales came at Rs. 45411 Cr (3.9% QoQ, 18.5% YoY) vs expectation of Rs. 45699.8 Cr, QoQ Rs. 43705 Cr, YoY Rs. 38322 Cr
EBIT came at Rs. 11588 Cr (-1.2% QoQ, 28.1% YoY) vs expectation of Rs. 11751.6 Cr, QoQ Rs. 11734 Cr, YoY Rs. 9048 Cr
EBIT Margin came at 25.5% vs expectation of 25.7%, QoQ 26.8%, YoY 23.6%
Adj. PAT came at Rs. 9008 Cr vs expectation of Rs. 9338.6 Cr, QoQ Rs. 9246 Cr, YoY Rs. 7008 Cr
Quarter EPS is Rs. 24.4
Stock is trading at P/E of 30.5x EPS
(Nirmal Bang Retail Research)
Order book ($ Bn ) came at $ 8.1 bn vs, QoQ $ 9.2 bn, YoY $ 6.9 bn
*Result is marginally below expectation*
CC Qoq came at 2.4% vs expectation of 3.7%, QoQ 4.2%
Lower growth is in account of impact of COVID in India. Core marke saw revenue growth of 5.2%
Dollar revenue came at $ 6154 Mn,(2.8% QoQ, 21.6% YoY) vs expectation of $ 6217.9 Mn, QoQ $ 5989 Mn, YoY $ 5059 Mn
Net sales came at Rs. 45411 Cr (3.9% QoQ, 18.5% YoY) vs expectation of Rs. 45699.8 Cr, QoQ Rs. 43705 Cr, YoY Rs. 38322 Cr
EBIT came at Rs. 11588 Cr (-1.2% QoQ, 28.1% YoY) vs expectation of Rs. 11751.6 Cr, QoQ Rs. 11734 Cr, YoY Rs. 9048 Cr
EBIT Margin came at 25.5% vs expectation of 25.7%, QoQ 26.8%, YoY 23.6%
Adj. PAT came at Rs. 9008 Cr vs expectation of Rs. 9338.6 Cr, QoQ Rs. 9246 Cr, YoY Rs. 7008 Cr
Quarter EPS is Rs. 24.4
Stock is trading at P/E of 30.5x EPS
*Life Insurance Monthly Update for June 2021*
June 2021 APE - Total Pvt. Players increased by +18% YoY to Rs. 3818 Cr
> Outperformers: Bajaj +56%, ICICI +44%, Max +18%
> Underperformers: SBI +13%, HDFC +5%
YTD (Apr-June 2021) APE - Pvt. Players increased by +27% YoY at Rs. 7954 Cr
> Outperformers: Bajaj +53%, ICICI +48%, Max +36%
> Underperformers: HDFC +26%, SBI +26%
*Bajaj Allianz Life Insurance Co. Ltd. (Bajaj Finserv) June'21 performance*
• APE came at Rs. 262 Cr. vs YoY Rs. 168 Cr. (+56%) and MoM Rs. 137 Cr. (+91%)
• *June. Month* Market Share (pvt player APE) came at 6.9% vs YoY 5.2% and MoM 7.1%
• *YTD* Market Share (pvt player APE) came at 7.1% vs YoY 5.9%
*ICICI Prudential Life Insurance Company. Ltd. June'21 performance*
• APE came at Rs. 452 Cr. vs YoY Rs. 314 Cr. (+44%) and MoM Rs. 257 Cr. (+76%)
• *June. Month* Market Share (pvt player APE) came at 11.8% vs YoY 9.7% and MoM 13.4%
• *YTD* Market Share (pvt player APE) came at 12.3% vs YoY 10.6%
*Max Life Insurance Company. Ltd. June'21 performance*
• APE came at Rs. 420 Cr. vs YoY Rs. 356 Cr. (+18%) and MoM Rs. 184 Cr. (+129%)
• *June. Month* Market Share (pvt player APE) came at 11.0% vs YoY 11.0% and MoM 9.5%
• *YTD* Market Share (pvt player APE) came at 10.6% vs YoY 10.0%
*SBI Life Insurance Company. Ltd. June'21 performance*
• APE came at Rs. 799 Cr. vs YoY Rs. 704 Cr. (+13%) and MoM Rs. 311 Cr. (+157%)
• *June. Month* Market Share (pvt player APE) came at 20.9% vs YoY 21.8% and MoM 16.1%
• *YTD* Market Share (pvt player APE) came at 19.4% vs YoY 19.5%
*HDFC Life Insurance Company. Ltd. June'21 performance*
• APE came at Rs. 654 Cr. vs YoY Rs. 620 Cr. (+5%) and MoM Rs. 399 Cr. (+64%)
• *June. Month* Market Share (pvt player APE) came at 17.1% vs YoY 19.2% and MoM 20.7%
• *YTD* Market Share (pvt player APE) came at 18.7% vs YoY 18.8%
June 2021 APE - Total Pvt. Players increased by +18% YoY to Rs. 3818 Cr
> Outperformers: Bajaj +56%, ICICI +44%, Max +18%
> Underperformers: SBI +13%, HDFC +5%
YTD (Apr-June 2021) APE - Pvt. Players increased by +27% YoY at Rs. 7954 Cr
> Outperformers: Bajaj +53%, ICICI +48%, Max +36%
> Underperformers: HDFC +26%, SBI +26%
*Bajaj Allianz Life Insurance Co. Ltd. (Bajaj Finserv) June'21 performance*
• APE came at Rs. 262 Cr. vs YoY Rs. 168 Cr. (+56%) and MoM Rs. 137 Cr. (+91%)
• *June. Month* Market Share (pvt player APE) came at 6.9% vs YoY 5.2% and MoM 7.1%
• *YTD* Market Share (pvt player APE) came at 7.1% vs YoY 5.9%
*ICICI Prudential Life Insurance Company. Ltd. June'21 performance*
• APE came at Rs. 452 Cr. vs YoY Rs. 314 Cr. (+44%) and MoM Rs. 257 Cr. (+76%)
• *June. Month* Market Share (pvt player APE) came at 11.8% vs YoY 9.7% and MoM 13.4%
• *YTD* Market Share (pvt player APE) came at 12.3% vs YoY 10.6%
*Max Life Insurance Company. Ltd. June'21 performance*
• APE came at Rs. 420 Cr. vs YoY Rs. 356 Cr. (+18%) and MoM Rs. 184 Cr. (+129%)
• *June. Month* Market Share (pvt player APE) came at 11.0% vs YoY 11.0% and MoM 9.5%
• *YTD* Market Share (pvt player APE) came at 10.6% vs YoY 10.0%
*SBI Life Insurance Company. Ltd. June'21 performance*
• APE came at Rs. 799 Cr. vs YoY Rs. 704 Cr. (+13%) and MoM Rs. 311 Cr. (+157%)
• *June. Month* Market Share (pvt player APE) came at 20.9% vs YoY 21.8% and MoM 16.1%
• *YTD* Market Share (pvt player APE) came at 19.4% vs YoY 19.5%
*HDFC Life Insurance Company. Ltd. June'21 performance*
• APE came at Rs. 654 Cr. vs YoY Rs. 620 Cr. (+5%) and MoM Rs. 399 Cr. (+64%)
• *June. Month* Market Share (pvt player APE) came at 17.1% vs YoY 19.2% and MoM 20.7%
• *YTD* Market Share (pvt player APE) came at 18.7% vs YoY 18.8%
*JP Morgan: Tata Consultancy Services: 1Q22 first look- Misses across revenues/EPS lead by India/EU, deal wins remain strong*
TCS 1QFY22 print missed Street/JPMe expectations across revenues, margins and EPS. Revenues were 0.3%/0.9% below JPMe/consensus while margins were 10bps below consensus and 30bps below JPMe. Deal wins continued to be strong at US$8.1bn, up 17% YY, but down 12% QQ implying overall environment remains strong. Misses on revenue and margins are likely to weigh on the stock in the near term.
First look at the results*: TCS missed expectations this time with CC revenue miss of 30bps/90bps and EBIT margin miss of 30bps/10bps driving a 3% EPS miss vs. JPMe/consensus. CC QQ revenues was soft for seasonally strong 1Q at 2.4% impacted primarily by a sharp decline in India business (down 14% QQ); ex-India growth was strong at 4.1%. Ebit margins declined 133bps QQ to 25.5% primarily due to wage hikes. Revenue growth was secular across industries, strong in US/UK but saw weakness in India, Europe & APAC (~30% of total). Deal wins continued to remain solid at US$8.1bn, up 17% YY and in-line with last 4 quarter average of US$7.9bn.
Where do we go from here?* While YY growth touched 16% given easy comps, sequential growth was softer than our street-low numbers. Even if this is from three geos (India, EU, APAC) that were slower than the rest (c.4%) these geos form~30% of the business are par for course for a global business like TCS. This is TCS’ first miss in four quarters and should drive 1-2% cut to consensus FY22 revenue and EPS. TCS’s strong signing and strong growth in US/UK reflects a very strong demand environment helped by demand from IT megatrends & cost takeout, in addition to its market success. However, given the stock has been flirting with all-time highs recently, the lack of either margin or growth surprise is likely to drive to drive stock consolidation in the near term. We remain OW on TCS for its cross cycle strengths.
Takeaways for peers*: TCS' exposure to India is higher than peers. We see primary takeaways from its strong deal wins and key verticals (4% QQ) as positive for Infosys, HCL. TechM has higher exposure to non US/UK markets but has lower expectations.
*Headlines from the results:*
*US$ revenues were up 2.8%QQ, 10bps ahead of JPMe but 70bps below consensus
*CC revenue grew 2.4% QQ, 30bps below JPMe/90bps below consensus
*EBIT margin was 25.5% below JPMe (25.8%) and consensus (25.6%) with a 133 bps decline QQ
*PAT was Rs90bn, 3% below JPMe and consensus
Deal wins were strong at $8.1bn (up 17% YY).*
*Details:*
*Geos*: Revenue grew sequentially for all regions except India; The CC QQ growth was led by North America/UK/LatAm/MEA (+4% QQ), dragged by Europe/APAC (up 2% QQ) and India down 14% QQ
*Verticals*: All verticals witnessed a growth QQ. CC QQ growth led by Life Science & Healthcare (+7% QQ), Manufacturing/Technology & Services (+5% QQ), Retail & CPG (+4% QQ), BFSI (+3% QQ), Communications & Media (+2% QQ)
TCS 1QFY22 print missed Street/JPMe expectations across revenues, margins and EPS. Revenues were 0.3%/0.9% below JPMe/consensus while margins were 10bps below consensus and 30bps below JPMe. Deal wins continued to be strong at US$8.1bn, up 17% YY, but down 12% QQ implying overall environment remains strong. Misses on revenue and margins are likely to weigh on the stock in the near term.
First look at the results*: TCS missed expectations this time with CC revenue miss of 30bps/90bps and EBIT margin miss of 30bps/10bps driving a 3% EPS miss vs. JPMe/consensus. CC QQ revenues was soft for seasonally strong 1Q at 2.4% impacted primarily by a sharp decline in India business (down 14% QQ); ex-India growth was strong at 4.1%. Ebit margins declined 133bps QQ to 25.5% primarily due to wage hikes. Revenue growth was secular across industries, strong in US/UK but saw weakness in India, Europe & APAC (~30% of total). Deal wins continued to remain solid at US$8.1bn, up 17% YY and in-line with last 4 quarter average of US$7.9bn.
Where do we go from here?* While YY growth touched 16% given easy comps, sequential growth was softer than our street-low numbers. Even if this is from three geos (India, EU, APAC) that were slower than the rest (c.4%) these geos form~30% of the business are par for course for a global business like TCS. This is TCS’ first miss in four quarters and should drive 1-2% cut to consensus FY22 revenue and EPS. TCS’s strong signing and strong growth in US/UK reflects a very strong demand environment helped by demand from IT megatrends & cost takeout, in addition to its market success. However, given the stock has been flirting with all-time highs recently, the lack of either margin or growth surprise is likely to drive to drive stock consolidation in the near term. We remain OW on TCS for its cross cycle strengths.
Takeaways for peers*: TCS' exposure to India is higher than peers. We see primary takeaways from its strong deal wins and key verticals (4% QQ) as positive for Infosys, HCL. TechM has higher exposure to non US/UK markets but has lower expectations.
*Headlines from the results:*
*US$ revenues were up 2.8%QQ, 10bps ahead of JPMe but 70bps below consensus
*CC revenue grew 2.4% QQ, 30bps below JPMe/90bps below consensus
*EBIT margin was 25.5% below JPMe (25.8%) and consensus (25.6%) with a 133 bps decline QQ
*PAT was Rs90bn, 3% below JPMe and consensus
Deal wins were strong at $8.1bn (up 17% YY).*
*Details:*
*Geos*: Revenue grew sequentially for all regions except India; The CC QQ growth was led by North America/UK/LatAm/MEA (+4% QQ), dragged by Europe/APAC (up 2% QQ) and India down 14% QQ
*Verticals*: All verticals witnessed a growth QQ. CC QQ growth led by Life Science & Healthcare (+7% QQ), Manufacturing/Technology & Services (+5% QQ), Retail & CPG (+4% QQ), BFSI (+3% QQ), Communications & Media (+2% QQ)
*Jefferies: Tata Consultancy Services: 1QFY22 First Cut: Revenue miss; profits in line*
*Key Takeaway*
TCS' 1QFY22 revenues up 2.4% QoQ in cc terms missed our estimates due to sharp revenue decline in India, however EBIT margins at 25.5%, down 130bps QoQ, and profit of Rs90bn, down 3% QoQ, were in line with estimates. Deal TCV was healthy at US$8.1bn. Attrition rose sequentially and Net additions at 20k were at their highest, which could lead to wage pressures. The company declared dividend of Rs7/share.
*Revenue miss; profits in line*: TCS' 1QFY22 revenues of US$6.2bn, up 2.4% QoQ incc terms missed our estimates. However, EBIT margins, down 130bps QoQ to 25.5%, and profit of Rs90bn, down 3% QoQ, were in line with our estimates. Sequential margin contraction was on expected lines due to wage hike effective from 1st April 2021. Head count addition remained strong at 20k, reflecting strong demand, but attrition at 8.6% rose too, which, in our view, could lead to wage pressures going forward.
*Broad-based revenue growth and healthy TCV*: Growth was driven by Life Sciences vertical, up 7% QoQ. Recovery in stressed verticals like retail (+4% QoQcc) and manufacturing (+4.8% QoQcc) continued. Among markets, North America (+4% QoQcc) and UK (+3.6% QoQcc) drove growth. However, growth in Continental Europe (+1.5% QoQcc) was soft and India saw a sharp decline of 14% QoQ due to the second wave. Strong traction on deal flow continued with TCS reporting deal TCV of US $8.1bn in 1Q.
*Commentary on growth and margins*: TCS is witnessing greater traction in growth and transformation services driving demand for cloud platform services and application services and analytics. Management highlighted that while growth in core markets was strong at over 4% QoQ, weakness in India led to the revenue miss. While June has seen some improvement and management believes that if this trend continues, 2Q should have a better showing. On margins, management highlighted that discretionary spends have started to pick up, but management remains confident that costs pressures can be managed.
*Payout*: The company declared a Rs7/share dividend. We will have more details post the conference call to be held at 8:00PM IST.
*Key Takeaway*
TCS' 1QFY22 revenues up 2.4% QoQ in cc terms missed our estimates due to sharp revenue decline in India, however EBIT margins at 25.5%, down 130bps QoQ, and profit of Rs90bn, down 3% QoQ, were in line with estimates. Deal TCV was healthy at US$8.1bn. Attrition rose sequentially and Net additions at 20k were at their highest, which could lead to wage pressures. The company declared dividend of Rs7/share.
*Revenue miss; profits in line*: TCS' 1QFY22 revenues of US$6.2bn, up 2.4% QoQ incc terms missed our estimates. However, EBIT margins, down 130bps QoQ to 25.5%, and profit of Rs90bn, down 3% QoQ, were in line with our estimates. Sequential margin contraction was on expected lines due to wage hike effective from 1st April 2021. Head count addition remained strong at 20k, reflecting strong demand, but attrition at 8.6% rose too, which, in our view, could lead to wage pressures going forward.
*Broad-based revenue growth and healthy TCV*: Growth was driven by Life Sciences vertical, up 7% QoQ. Recovery in stressed verticals like retail (+4% QoQcc) and manufacturing (+4.8% QoQcc) continued. Among markets, North America (+4% QoQcc) and UK (+3.6% QoQcc) drove growth. However, growth in Continental Europe (+1.5% QoQcc) was soft and India saw a sharp decline of 14% QoQ due to the second wave. Strong traction on deal flow continued with TCS reporting deal TCV of US $8.1bn in 1Q.
*Commentary on growth and margins*: TCS is witnessing greater traction in growth and transformation services driving demand for cloud platform services and application services and analytics. Management highlighted that while growth in core markets was strong at over 4% QoQ, weakness in India led to the revenue miss. While June has seen some improvement and management believes that if this trend continues, 2Q should have a better showing. On margins, management highlighted that discretionary spends have started to pick up, but management remains confident that costs pressures can be managed.
*Payout*: The company declared a Rs7/share dividend. We will have more details post the conference call to be held at 8:00PM IST.
EVENTS TODAY
Q1 RESULTS
DELTA CORP
EX-DATES
Navin Fluorine International
Dividend - Rs 6 Per Share
Dr. Reddy's Laboratories
Dividend - Rs 25 Per Share
KIRLOSKAR PNEUMATIC
Final Dividend - Rs. - 3.5000
Trent
Dividend - Re 0.60 Per Share
@CNBC_Awaaz
Q1 RESULTS
DELTA CORP
EX-DATES
Navin Fluorine International
Dividend - Rs 6 Per Share
Dr. Reddy's Laboratories
Dividend - Rs 25 Per Share
KIRLOSKAR PNEUMATIC
Final Dividend - Rs. - 3.5000
Trent
Dividend - Re 0.60 Per Share
@CNBC_Awaaz
sugar concall with Shree Renuka Sugars on the industry.
Key Takeaways - Systematic Broker Call with Sree Renuka..
Management– 8th July, 2021
Speakers: Ravi Gupta, President and Atul Chaturvedi, Executive Chairman
• Ethanol more important than sugar right now. Ethanol driving sugar sector more than sugar has ever driven sugar sector
• Sugar prices are Rs. 2/per kg approx.. higher in North as compared to Maharashtra
• Agriculture yields went up by 40% and recovery by 200 bps reducing cost of production of sugar due to cane variety C0 238
• India is an efficient sugar processor, due to higher sugarcane prices sugar costs around 20 cents/pound; global prices are less
• World sugar balance sheet is negative since last 3 years similar to what happened in 2008-2011
• Ethanol policy in place – real action is seen on the ground: interest subvention scheme, faster environment clearance
• Freerer movement of molasses and ethanol is allowed within India
• Action on supply chain management:
a) OMCs are increasing tank capacity
b) blending ethanol at oil refineries
c) transporters are investing in tankers
d) railway movement of ethanol
• Profitability in sugar industry shall increase crop care and more investment and innovation in agriculture
• Ethanol advantage – lower sugar production, no price fluctuation; higher liquidity, better returns
• Standalone sugar mills may struggle
• Risk factors to watch out – weather; government policy; investment pace in ethanol industry; growth in liquor consumption
• Economics of ethanol from sugar better than grain-based ethanol; grain based realisation is around Rs. 53-54 per litre
• 20% ethanol blending to save forex of 160 lakh crores + we will get rid of dependence on middle east countries also help us to be a part og global thrust for bio-fuel
Key Takeaways - Systematic Broker Call with Sree Renuka..
Management– 8th July, 2021
Speakers: Ravi Gupta, President and Atul Chaturvedi, Executive Chairman
• Ethanol more important than sugar right now. Ethanol driving sugar sector more than sugar has ever driven sugar sector
• Sugar prices are Rs. 2/per kg approx.. higher in North as compared to Maharashtra
• Agriculture yields went up by 40% and recovery by 200 bps reducing cost of production of sugar due to cane variety C0 238
• India is an efficient sugar processor, due to higher sugarcane prices sugar costs around 20 cents/pound; global prices are less
• World sugar balance sheet is negative since last 3 years similar to what happened in 2008-2011
• Ethanol policy in place – real action is seen on the ground: interest subvention scheme, faster environment clearance
• Freerer movement of molasses and ethanol is allowed within India
• Action on supply chain management:
a) OMCs are increasing tank capacity
b) blending ethanol at oil refineries
c) transporters are investing in tankers
d) railway movement of ethanol
• Profitability in sugar industry shall increase crop care and more investment and innovation in agriculture
• Ethanol advantage – lower sugar production, no price fluctuation; higher liquidity, better returns
• Standalone sugar mills may struggle
• Risk factors to watch out – weather; government policy; investment pace in ethanol industry; growth in liquor consumption
• Economics of ethanol from sugar better than grain-based ethanol; grain based realisation is around Rs. 53-54 per litre
• 20% ethanol blending to save forex of 160 lakh crores + we will get rid of dependence on middle east countries also help us to be a part og global thrust for bio-fuel
*SERNET Midnight News Update – Jul 09th 2021*
Zomato fixed the IPO price band for its Rs.9,375 crore IPO in the range of Rs.72 to Rs.76 per share. The issue will open on 14 July and close for subscription on 16 July. Zomato is backed by Ant group of China. In the first half of 2021, India saw Rs.32,000 crore collected from 22 IPOs so far. The month of Jul-21 alone is expected to equal that amount with the help of mega IPOs like Zomato, Aadhar Housing and Nuvoco Vistas slated to hit the IPO market in Jul-21. India’s food delivery market is currently pegged at $4.2 billion.
TCS announced strong yoy growth in numbers but sequentially TCS reported lower operating profits and net profits for the Jun-21 quarter. TCS reported 18.5% growth in net sales at Rs.45,411 crore and a 28.54% growth in net profits at Rs.9,008 crore. While the EBITDA margin stayed above the 25% mark, it was nearly 133 bps lower than the sequential Mar-21 quarter. As of Jun-21, TCS had an order book position of $8.1 billion and the lowest attrition rate at 8.6%. India revenues fell sequentially by 14.5% in Jun-21 quarter.
If the vehicle output numbers announced by SIAM were robust for Jun-21, there is dual confirmation with FADA confirming solid dealer sales too. The important parameter of vehicle registration across categories was up 22.62% yoy in Jun-21. A total of 12,17,151 vehicles were registered across India in Jun-21. FADA confirmed that July was also seeing good traction in terms of enquiries and bookings. The reopening post COVID 2.0 led lockdowns has helped the numbers to pick up. However, the delta variant could be a spoiler.
Macrotech Developers (Lodha Group) reported 88% higher sales bookings for the Jun-21 quarter at Rs.957 crore, despite the pandemic risks. Even the collections in the Jun-21 quarter improved by almost 4.5 times at Rs.1,714 crore. For the fiscal year FY21, the sales bookings had fallen to Rs.5,968 crore compared to Rs.6,570 crore in FY20. As promised in the IPO prospectus, Macrotech reduced its debt by Rs.3,600 crore from the issue proceeds. The company targes to reduce the net debt to Rs.10,000 crore by end of FY22.
Both the IPOs that opened on 07 July appear to be getting a good response in the IPO market. The Rs.963 crore IPO of G R Infraprojects got subscribed 5.90 times at the ned of the second day, getting applications for 46.57 million shares against 7.90 million shares on offer. Retail portion was subscribed 7.49 times. The other IPO of Clean Science and Technology was subscribed 4.38 times by end of second day, getting applications for 52.69 million shares against 12.3 million shares on offer. Both IPOs will close on Friday.
Net inflows into equity funds in June 2021 fell by half as redemption pressure mounted with investors rushing to book profits. Net inflows into equity funds stood at Rs.4,609 crore in Jun-21 compared to Rs.9,236 crore in May-21. While overall flows were tepid, SIP flows into mutual funds in June 2021 stood robust at Rs.9,155 crore. Among debt funds, floater funds were sharply in demand. In the hybrid segment, arbitrage funds continued to attract interest. MF AUM touched an all-time high level of Rs.33.66 trillion.
Among the many changes underway at LIC, the insurer has decided to have a CEO and a managing director and will scrap the chairman’s position altogether. This will position LIC more favourably as it prepares for the prestigious IPO later this fiscal year. The government is expected to invite bids from merchant bankers this month for managing the LIC disinvestment. The IPO is proposed to be launched around January 2022. DIPAM has appointed Milliman Advisors as the actuarial advisors to assess the embedded value of LIC.
Even as people had almost forgotten about the Reliance / Future group deal, Supreme Court has agreed to hear the case on 20-July. The deal had got delayed after Amazon objected to the deal since by virtue of its stake in Future Coupons, Amazon was automatically entitled to be given the first right of refusal in the acquisition of Future group.
Zomato fixed the IPO price band for its Rs.9,375 crore IPO in the range of Rs.72 to Rs.76 per share. The issue will open on 14 July and close for subscription on 16 July. Zomato is backed by Ant group of China. In the first half of 2021, India saw Rs.32,000 crore collected from 22 IPOs so far. The month of Jul-21 alone is expected to equal that amount with the help of mega IPOs like Zomato, Aadhar Housing and Nuvoco Vistas slated to hit the IPO market in Jul-21. India’s food delivery market is currently pegged at $4.2 billion.
TCS announced strong yoy growth in numbers but sequentially TCS reported lower operating profits and net profits for the Jun-21 quarter. TCS reported 18.5% growth in net sales at Rs.45,411 crore and a 28.54% growth in net profits at Rs.9,008 crore. While the EBITDA margin stayed above the 25% mark, it was nearly 133 bps lower than the sequential Mar-21 quarter. As of Jun-21, TCS had an order book position of $8.1 billion and the lowest attrition rate at 8.6%. India revenues fell sequentially by 14.5% in Jun-21 quarter.
If the vehicle output numbers announced by SIAM were robust for Jun-21, there is dual confirmation with FADA confirming solid dealer sales too. The important parameter of vehicle registration across categories was up 22.62% yoy in Jun-21. A total of 12,17,151 vehicles were registered across India in Jun-21. FADA confirmed that July was also seeing good traction in terms of enquiries and bookings. The reopening post COVID 2.0 led lockdowns has helped the numbers to pick up. However, the delta variant could be a spoiler.
Macrotech Developers (Lodha Group) reported 88% higher sales bookings for the Jun-21 quarter at Rs.957 crore, despite the pandemic risks. Even the collections in the Jun-21 quarter improved by almost 4.5 times at Rs.1,714 crore. For the fiscal year FY21, the sales bookings had fallen to Rs.5,968 crore compared to Rs.6,570 crore in FY20. As promised in the IPO prospectus, Macrotech reduced its debt by Rs.3,600 crore from the issue proceeds. The company targes to reduce the net debt to Rs.10,000 crore by end of FY22.
Both the IPOs that opened on 07 July appear to be getting a good response in the IPO market. The Rs.963 crore IPO of G R Infraprojects got subscribed 5.90 times at the ned of the second day, getting applications for 46.57 million shares against 7.90 million shares on offer. Retail portion was subscribed 7.49 times. The other IPO of Clean Science and Technology was subscribed 4.38 times by end of second day, getting applications for 52.69 million shares against 12.3 million shares on offer. Both IPOs will close on Friday.
Net inflows into equity funds in June 2021 fell by half as redemption pressure mounted with investors rushing to book profits. Net inflows into equity funds stood at Rs.4,609 crore in Jun-21 compared to Rs.9,236 crore in May-21. While overall flows were tepid, SIP flows into mutual funds in June 2021 stood robust at Rs.9,155 crore. Among debt funds, floater funds were sharply in demand. In the hybrid segment, arbitrage funds continued to attract interest. MF AUM touched an all-time high level of Rs.33.66 trillion.
Among the many changes underway at LIC, the insurer has decided to have a CEO and a managing director and will scrap the chairman’s position altogether. This will position LIC more favourably as it prepares for the prestigious IPO later this fiscal year. The government is expected to invite bids from merchant bankers this month for managing the LIC disinvestment. The IPO is proposed to be launched around January 2022. DIPAM has appointed Milliman Advisors as the actuarial advisors to assess the embedded value of LIC.
Even as people had almost forgotten about the Reliance / Future group deal, Supreme Court has agreed to hear the case on 20-July. The deal had got delayed after Amazon objected to the deal since by virtue of its stake in Future Coupons, Amazon was automatically entitled to be given the first right of refusal in the acquisition of Future group.
*Jefferies: Tata Consultancy Services: 1QFY22 First Cut: Revenue miss; profits in line*
*Key Takeaway*
TCS' 1QFY22 revenues up 2.4% QoQ in cc terms missed our estimates due to sharp revenue decline in India, however EBIT margins at 25.5%, down 130bps QoQ, and profit of Rs90bn, down 3% QoQ, were in line with estimates. Deal TCV was healthy at US$8.1bn. Attrition rose sequentially and Net additions at 20k were at their highest, which could lead to wage pressures. The company declared dividend of Rs7/share.
*Revenue miss; profits in line*: TCS' 1QFY22 revenues of US$6.2bn, up 2.4% QoQ incc terms missed our estimates. However, EBIT margins, down 130bps QoQ to 25.5%, and profit of Rs90bn, down 3% QoQ, were in line with our estimates. Sequential margin contraction was on expected lines due to wage hike effective from 1st April 2021. Head count addition remained strong at 20k, reflecting strong demand, but attrition at 8.6% rose too, which, in our view, could lead to wage pressures going forward.
*Broad-based revenue growth and healthy TCV*: Growth was driven by Life Sciences vertical, up 7% QoQ. Recovery in stressed verticals like retail (+4% QoQcc) and manufacturing (+4.8% QoQcc) continued. Among markets, North America (+4% QoQcc) and UK (+3.6% QoQcc) drove growth. However, growth in Continental Europe (+1.5% QoQcc) was soft and India saw a sharp decline of 14% QoQ due to the second wave. Strong traction on deal flow continued with TCS reporting deal TCV of US $8.1bn in 1Q.
*Commentary on growth and margins*: TCS is witnessing greater traction in growth and transformation services driving demand for cloud platform services and application services and analytics. Management highlighted that while growth in core markets was strong at over 4% QoQ, weakness in India led to the revenue miss. While June has seen some improvement and management believes that if this trend continues, 2Q should have a better showing. On margins, management highlighted that discretionary spends have started to pick up, but management remains confident that costs pressures can be managed.
*Payout*: The company declared a Rs7/share dividend. We will have more details post the conference call to be held at 8:00PM IST.
*Key Takeaway*
TCS' 1QFY22 revenues up 2.4% QoQ in cc terms missed our estimates due to sharp revenue decline in India, however EBIT margins at 25.5%, down 130bps QoQ, and profit of Rs90bn, down 3% QoQ, were in line with estimates. Deal TCV was healthy at US$8.1bn. Attrition rose sequentially and Net additions at 20k were at their highest, which could lead to wage pressures. The company declared dividend of Rs7/share.
*Revenue miss; profits in line*: TCS' 1QFY22 revenues of US$6.2bn, up 2.4% QoQ incc terms missed our estimates. However, EBIT margins, down 130bps QoQ to 25.5%, and profit of Rs90bn, down 3% QoQ, were in line with our estimates. Sequential margin contraction was on expected lines due to wage hike effective from 1st April 2021. Head count addition remained strong at 20k, reflecting strong demand, but attrition at 8.6% rose too, which, in our view, could lead to wage pressures going forward.
*Broad-based revenue growth and healthy TCV*: Growth was driven by Life Sciences vertical, up 7% QoQ. Recovery in stressed verticals like retail (+4% QoQcc) and manufacturing (+4.8% QoQcc) continued. Among markets, North America (+4% QoQcc) and UK (+3.6% QoQcc) drove growth. However, growth in Continental Europe (+1.5% QoQcc) was soft and India saw a sharp decline of 14% QoQ due to the second wave. Strong traction on deal flow continued with TCS reporting deal TCV of US $8.1bn in 1Q.
*Commentary on growth and margins*: TCS is witnessing greater traction in growth and transformation services driving demand for cloud platform services and application services and analytics. Management highlighted that while growth in core markets was strong at over 4% QoQ, weakness in India led to the revenue miss. While June has seen some improvement and management believes that if this trend continues, 2Q should have a better showing. On margins, management highlighted that discretionary spends have started to pick up, but management remains confident that costs pressures can be managed.
*Payout*: The company declared a Rs7/share dividend. We will have more details post the conference call to be held at 8:00PM IST.
*UBS: Tata Consultancy Services: Q1 FY22 revenues and margins miss forecasts*
*Q: How did the results compare vs expectations?*
A: Q1 FY22 US$ revenue at US$6,154 mn was up 2.7% QoQ (21.6% YoY), but below UBSe/ consensus, due to softer-than-expected India revenues. CC revs were 2.4% QoQ (vs 3.3% UBSe)/ 16.4% YoY. EBIT margin at 25.5% was 40 bps below UBSe and consensus. PAT at Rs.90 bn was 3.3% below UBSe.
*Q: What were the most noteworthy areas in the results?*
A: In QoQ cc terms, BFSI was up 3.1%, retail 4.4%, manufacturing 4.8%, healthcare 7.3% and North America 4.1%, UK 3.6%, Continental Europe 1.5%, India -14.1%. Headcount was up 20,409 QoQ (19,388 in Q4 FY21). IT services attrition was 8.6% (7.2% in Q4 FY21). TCV for Q1 was US$8.1 bn (US$9.2 bn in Q4 FY21). Interim dividend announced at Rs. 7 per share.
*Q: Has the company's outlook/guidance changed?*
A: The CEO noted that the company's operating model remains resilient enough to tackle a potential COVID-19 third wave and remained positive that FY22E revenue growth would be better than FY21E.
*Q: How would we expect investors to react?*
A: We expect consensus earnings cuts post Q1 FY22 numbers, which should elicit a negative reaction from the stock. Broader market concerns (COVID-19 wave 3, oil prices, etc), however, could keep the stock defensive.
*Q: How did the results compare vs expectations?*
A: Q1 FY22 US$ revenue at US$6,154 mn was up 2.7% QoQ (21.6% YoY), but below UBSe/ consensus, due to softer-than-expected India revenues. CC revs were 2.4% QoQ (vs 3.3% UBSe)/ 16.4% YoY. EBIT margin at 25.5% was 40 bps below UBSe and consensus. PAT at Rs.90 bn was 3.3% below UBSe.
*Q: What were the most noteworthy areas in the results?*
A: In QoQ cc terms, BFSI was up 3.1%, retail 4.4%, manufacturing 4.8%, healthcare 7.3% and North America 4.1%, UK 3.6%, Continental Europe 1.5%, India -14.1%. Headcount was up 20,409 QoQ (19,388 in Q4 FY21). IT services attrition was 8.6% (7.2% in Q4 FY21). TCV for Q1 was US$8.1 bn (US$9.2 bn in Q4 FY21). Interim dividend announced at Rs. 7 per share.
*Q: Has the company's outlook/guidance changed?*
A: The CEO noted that the company's operating model remains resilient enough to tackle a potential COVID-19 third wave and remained positive that FY22E revenue growth would be better than FY21E.
*Q: How would we expect investors to react?*
A: We expect consensus earnings cuts post Q1 FY22 numbers, which should elicit a negative reaction from the stock. Broader market concerns (COVID-19 wave 3, oil prices, etc), however, could keep the stock defensive.
*JP Morgan: Tata Consultancy Services: 1Q22 first look- Misses across revenues/EPS lead by India/EU, deal wins remain strong*
TCS 1QFY22 print missed Street/JPMe expectations across revenues, margins and EPS. Revenues were 0.3%/0.9% below JPMe/consensus while margins were 10bps below consensus and 30bps below JPMe. Deal wins continued to be strong at US$8.1bn, up 17% YY, but down 12% QQ implying overall environment remains strong. Misses on revenue and margins are likely to weigh on the stock in the near term.
First look at the results*: TCS missed expectations this time with CC revenue miss of 30bps/90bps and EBIT margin miss of 30bps/10bps driving a 3% EPS miss vs. JPMe/consensus. CC QQ revenues was soft for seasonally strong 1Q at 2.4% impacted primarily by a sharp decline in India business (down 14% QQ); ex-India growth was strong at 4.1%. Ebit margins declined 133bps QQ to 25.5% primarily due to wage hikes. Revenue growth was secular across industries, strong in US/UK but saw weakness in India, Europe & APAC (~30% of total). Deal wins continued to remain solid at US$8.1bn, up 17% YY and in-line with last 4 quarter average of US$7.9bn.
Where do we go from here?* While YY growth touched 16% given easy comps, sequential growth was softer than our street-low numbers. Even if this is from three geos (India, EU, APAC) that were slower than the rest (c.4%) these geos form~30% of the business are par for course for a global business like TCS. This is TCS’ first miss in four quarters and should drive 1-2% cut to consensus FY22 revenue and EPS. TCS’s strong signing and strong growth in US/UK reflects a very strong demand environment helped by demand from IT megatrends & cost takeout, in addition to its market success. However, given the stock has been flirting with all-time highs recently, the lack of either margin or growth surprise is likely to drive to drive stock consolidation in the near term. We remain OW on TCS for its cross cycle strengths.
Takeaways for peers*: TCS' exposure to India is higher than peers. We see primary takeaways from its strong deal wins and key verticals (4% QQ) as positive for Infosys, HCL. TechM has higher exposure to non US/UK markets but has lower expectations.
*Headlines from the results:*
*US$ revenues were up 2.8%QQ, 10bps ahead of JPMe but 70bps below consensus
*CC revenue grew 2.4% QQ, 30bps below JPMe/90bps below consensus
*EBIT margin was 25.5% below JPMe (25.8%) and consensus (25.6%) with a 133 bps decline QQ
*PAT was Rs90bn, 3% below JPMe and consensus
Deal wins were strong at $8.1bn (up 17% YY).*
*Details:*
*Geos*: Revenue grew sequentially for all regions except India; The CC QQ growth was led by North America/UK/LatAm/MEA (+4% QQ), dragged by Europe/APAC (up 2% QQ) and India down 14% QQ
*Verticals*: All verticals witnessed a growth QQ. CC QQ growth led by Life Science & Healthcare (+7% QQ), Manufacturing/Technology & Services (+5% QQ), Retail & CPG (+4% QQ), BFSI (+3% QQ), Communications & Media (+2% QQ)
TCS 1QFY22 print missed Street/JPMe expectations across revenues, margins and EPS. Revenues were 0.3%/0.9% below JPMe/consensus while margins were 10bps below consensus and 30bps below JPMe. Deal wins continued to be strong at US$8.1bn, up 17% YY, but down 12% QQ implying overall environment remains strong. Misses on revenue and margins are likely to weigh on the stock in the near term.
First look at the results*: TCS missed expectations this time with CC revenue miss of 30bps/90bps and EBIT margin miss of 30bps/10bps driving a 3% EPS miss vs. JPMe/consensus. CC QQ revenues was soft for seasonally strong 1Q at 2.4% impacted primarily by a sharp decline in India business (down 14% QQ); ex-India growth was strong at 4.1%. Ebit margins declined 133bps QQ to 25.5% primarily due to wage hikes. Revenue growth was secular across industries, strong in US/UK but saw weakness in India, Europe & APAC (~30% of total). Deal wins continued to remain solid at US$8.1bn, up 17% YY and in-line with last 4 quarter average of US$7.9bn.
Where do we go from here?* While YY growth touched 16% given easy comps, sequential growth was softer than our street-low numbers. Even if this is from three geos (India, EU, APAC) that were slower than the rest (c.4%) these geos form~30% of the business are par for course for a global business like TCS. This is TCS’ first miss in four quarters and should drive 1-2% cut to consensus FY22 revenue and EPS. TCS’s strong signing and strong growth in US/UK reflects a very strong demand environment helped by demand from IT megatrends & cost takeout, in addition to its market success. However, given the stock has been flirting with all-time highs recently, the lack of either margin or growth surprise is likely to drive to drive stock consolidation in the near term. We remain OW on TCS for its cross cycle strengths.
Takeaways for peers*: TCS' exposure to India is higher than peers. We see primary takeaways from its strong deal wins and key verticals (4% QQ) as positive for Infosys, HCL. TechM has higher exposure to non US/UK markets but has lower expectations.
*Headlines from the results:*
*US$ revenues were up 2.8%QQ, 10bps ahead of JPMe but 70bps below consensus
*CC revenue grew 2.4% QQ, 30bps below JPMe/90bps below consensus
*EBIT margin was 25.5% below JPMe (25.8%) and consensus (25.6%) with a 133 bps decline QQ
*PAT was Rs90bn, 3% below JPMe and consensus
Deal wins were strong at $8.1bn (up 17% YY).*
*Details:*
*Geos*: Revenue grew sequentially for all regions except India; The CC QQ growth was led by North America/UK/LatAm/MEA (+4% QQ), dragged by Europe/APAC (up 2% QQ) and India down 14% QQ
*Verticals*: All verticals witnessed a growth QQ. CC QQ growth led by Life Science & Healthcare (+7% QQ), Manufacturing/Technology & Services (+5% QQ), Retail & CPG (+4% QQ), BFSI (+3% QQ), Communications & Media (+2% QQ)
TCS First Cut – Dollar Term Revenue marginally below estimates …Ebit margin above estimates
· TCS Q1 Dollar term revenue at $6154mn (up 2.4% QoQ) – expectation $6216mn
· EBIT margin at 25.5% vs 26.8% (QoQ) – expectation 25.2%
· Net profit fell 2.5% to Rs 9,008 crore - expectation Rs9300cr
· Operating profit fell 2.08% to Rs 11,834 crore. – expectation Rs11500cr
· TCS won new deals worth $8.1 billion.
· At the end of FY21, the company had total contract value of $31 billion.
· Attrition inched up to 8.3%.
· TCS Q1 Dollar term revenue at $6154mn (up 2.4% QoQ) – expectation $6216mn
· EBIT margin at 25.5% vs 26.8% (QoQ) – expectation 25.2%
· Net profit fell 2.5% to Rs 9,008 crore - expectation Rs9300cr
· Operating profit fell 2.08% to Rs 11,834 crore. – expectation Rs11500cr
· TCS won new deals worth $8.1 billion.
· At the end of FY21, the company had total contract value of $31 billion.
· Attrition inched up to 8.3%.
Money Market Update
The rupee ended at 74.71 against the U.S. Dollar on Thursday as compared to Wednesday’s closing of 74.61.
The rupee ended at 74.71 against the U.S. Dollar on Thursday as compared to Wednesday’s closing of 74.61.
Trading Tweaks
Ex-Date Final Dividend: Trent, Dr. Reddy's Laboratories, Control Print, Kirloskar Pneumatic, Navin Fluorine International
Record Date Final Dividend: Fineotex Chemical, DCM Shriram
Record Date Dividend: Crompton Greaves Consumer Electricals, Indian Bank
Price Band Revised From 10% To 5%: Gulshan Polyols, HFCL, Newgen Software Technologies
Move Into ASM Framework: Southern Petrochemical Industries Corporation, Dynamatic Technologies
Ex-Date Final Dividend: Trent, Dr. Reddy's Laboratories, Control Print, Kirloskar Pneumatic, Navin Fluorine International
Record Date Final Dividend: Fineotex Chemical, DCM Shriram
Record Date Dividend: Crompton Greaves Consumer Electricals, Indian Bank
Price Band Revised From 10% To 5%: Gulshan Polyols, HFCL, Newgen Software Technologies
Move Into ASM Framework: Southern Petrochemical Industries Corporation, Dynamatic Technologies
Who’s Meeting Whom
HPL Electric & Power: To meet Abakkus Asset Management on July 9.
Dixon Technologies (India): To meet FMR and Blue Coast Capital on July 9.
HPL Electric & Power: To meet Abakkus Asset Management on July 9.
Dixon Technologies (India): To meet FMR and Blue Coast Capital on July 9.
Stocks To Watch
Mahindra and Mahindra Financial Services: Completed the acquisition of 20% of the Equity Share Capital of Ideal Finance Limited from its existing shareholders, resulting in an increase in MMFSL’s stake in Ideal Finance from 38.20% to 58.20%.
Bank of Baroda: Appointed Alok Vajpeyi as shareholder director of the bank. The board has also approved raising up to Rs 2,000 crore.
Tata Steel: CARE Ratings revised the company’s long-term credit rating from AA/Negative to AA+/Outlook.
Aban Offshore: Received possession notice for its assets from Punjab National Bank, Chennai for the recovery of loan borrowed by the company.
Bharat Dynamics: Signed a contract worth about Rs 499 crore with Ministry of Defence for manufacture and supply of Akash Missiles to the Indian Air Force. With this contract the company’s order book position now stands at about Rs 8,683 crore.
Tata Motors has signed a two-year MoU with Jammu & Kashmir Bank, to offer easy financing options to its customers.
Earnings Scheduled: Delta Corp
Mahindra and Mahindra Financial Services: Completed the acquisition of 20% of the Equity Share Capital of Ideal Finance Limited from its existing shareholders, resulting in an increase in MMFSL’s stake in Ideal Finance from 38.20% to 58.20%.
Bank of Baroda: Appointed Alok Vajpeyi as shareholder director of the bank. The board has also approved raising up to Rs 2,000 crore.
Tata Steel: CARE Ratings revised the company’s long-term credit rating from AA/Negative to AA+/Outlook.
Aban Offshore: Received possession notice for its assets from Punjab National Bank, Chennai for the recovery of loan borrowed by the company.
Bharat Dynamics: Signed a contract worth about Rs 499 crore with Ministry of Defence for manufacture and supply of Akash Missiles to the Indian Air Force. With this contract the company’s order book position now stands at about Rs 8,683 crore.
Tata Motors has signed a two-year MoU with Jammu & Kashmir Bank, to offer easy financing options to its customers.
Earnings Scheduled: Delta Corp