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Tech Mahindra Q1`Results Review:&nbsp;Tech Mahindra disappointed the Street with its June quarter (Q1FY24) financial results as the tech major delivered poor performance on all fronts, be it revenue, deal wins, margins, or PAT. While the Street had already factored in a soft quarter for the IT companies, Tech Mahindra's performance has been so dismal that a number of brokerages and analysts have straightaway assigned a "Sell" rating to the stock. The company has posted the weakest set of numbers among the Tier-1 IT services companies.

ICICI Securities, in its Q1 review report, said, "TechM reported the weakest set of numbers for Q1FY24 with a) an order book of $359 million, down 40 per cent QoQ and 55 per cent YoY; b) USD revenue decline of 4 per cent QoQ and 2 per cent YoY due to 9 per cent QoQ decline in its largest vertical (communications), and c) the lowest EBIT margin (since Dec 04) at 6.8 per cent (8.2 per cent after adjusting for a one-time provision of USD 23 million related to client bankruptcy).

The brokerage added that with no near-term visibility of sharp demand recovery, a soft order book, and a bleak demand outlook for the communications vertical due to discretionary and 5G spend cuts, it is now forecasting 0.1 per cent CC YoY growth for TechM in FY24E.

"Due to the significant miss in Q1, we have cut our FY24E EPS estimate by 12 per cent, but largely maintain our FY25E and FY26E EPS, factoring in double-digit revenue growth during the two years, with EBIT margin recovering to 12.8 per cent from 11 per cent in FY24E," it added.&nbsp;

<h2><a href="https://www.zeebiz.com/companies/news-tech-mahindra-reports-disappointing-q1-numbers-net-profit-falls-38-to-rs-6925-crore-246298">Tech Mahindra reports disappointing Q1 numbers; net profit falls 38% to Rs 692.5 crore</a></h2>

The brokerage has a "Sell" rating on the stock with a target price of Rs 910.&nbsp;

Nirmal Bang Securities, which has been bearish on the stock and the overall IT sector, for more than a year now, reiterated its sell call. Foreign brokerage Citi has also given a sell call on the stock with a target price of Rs 900.&nbsp;

However, among the deluge of downgrades, cuts in target prices, and sell calls, CLSA and Nomura have maintained their positive stance on the Pune-headquartered company. CLSA has given an "Outperform" rating on the stock with a target price of Rs 1,120, while Nomura has a "BUY" call with a target price of Rs 1,316.

In its rationale, Nomura said that Q1 was a big miss, but it has likely bottomed out. Analysts at the brokerage note that demand moderation will weigh on growth in FY24. It further said that Q1 revenue missed estimates due to sharp weakness in the telecom vertical. It has revised the FY24–25 earnings per share (EPS) by 3–10 per cent.

<h2>Tech Mahindra's share price</h2>

At the time of writing this copy, the stock was trading 4.70 per cent lower at Rs 1,090.25 on the BSE. In the past three months (till July 26 closing), the stock has rallied 13.96 per cent, Trendlyne data show.

Tech Mahindra Q1`Results Review:&nbsp;The company has posted the weakest set numbers among the Tier-1 IT services companies.&nbsp;


Amid a slew of downgrades and "Sell" ratings; Nomura is positive on Tech Mahindra, TP set at Rs 1,316

Shares of Larsen &amp; Toubro (L&amp;T), the construction and infrastructure major, scaled a record high of Rs 2,673.60 apiece on the BSE on Wednesday (July 26), a day after the company announced a Rs 10,000 crore share buyback along with the release of its June quarter (Q1FY24) numbers. Investors cheered the buyback plan, which is the first by the infra giant, thus propelling the stock to a new high. Its robust Q1 numbers, too, aided the stock price.

And L&amp;T is not alone. Of late, a spate of domestic companies have announced share buybacks, thereby lifting their share prices to impressive highs. For instance, Aarti Drugs hit a fresh 52-week high earlier this week after the company announced that its board had approved plans for a buyback of 6.65 lakhs fully paid-up equity shares, representing a 0.72 per cent equity.

Before that, BSE Ltd announced it would buy back 45.9 lakh equity shares, representing 3.39 per cent of the total number of equity shares in the total paid-up equity capital of the company as of March 31, 2023. The stock exchange said it would spend Rs 374 crore on the buyback.

Besides, names such as Amrutanjan Health Care, IndiaMart InterMesh, Ashiana Housing, and Goldiam International have also announced share buybacks and more companies may do so in the coming days.

<h2>So, as an equity investor, what should you know?&nbsp;</h2>

First things first, a share buyback is nothing but the repurchase of a certain amount of a company's outstanding shares, either through a tender offer or via an open market route. In a buyback, the price of the concerned shares is generally higher than the prevailing market price.

Any company goes for a buyback of shares if the board feels that the stock is undervalued or, in some cases, if the company does not have any productive use of the free cash on its books and would prefer to return it and reward the shareholders through a buyback of shares rather than dividend payouts. However, one must exercise caution before chasing buybacks, according to analysts.

Moreover, an investor should focus on two things: the premium, which means the price at which the companies are planning to purchase back outstanding shares, and the percentage of the total paid-up equity capital that is intended to be bought back.

Generally, the buyback of shares is seen as positive by investors and indicates the confidence of promoters in the business. Consequently, the share price normally reacts positively to buyback announcements. But the share price movement also depends on many other factors, like the quantum of the buyback, the premium offered to prevailing market prices, and whether the promoters will also tender their shares, says Gaurav Dua, Head, Capital Market Strategy, Sharekhan by BNP Paribas.

"These aside, but importantly, investors should consider fundamental factors like growth outlook and valuations. So, as an investor, you need to take various factors into account and not simply chase any stock based on the news of a buyback," Dua adds.

G Chokkalingam, Founder and Managing Director, of Equinomics Research, says that a lot of investors get carried away by the premium price. For example, if a company's current market price is Rs 500 and it plans to buy back the shares at Rs 700, there's a Rs 200 premium, and people rush to purchase the stocks in order to get eligible for a buyback offer, leading to a sharp spike in stock prices.

The market expert explains that premiums are important, but what is even more important is the quantum of equity that is planned to be bought back. Investors should focus on the percentage of equity the companies are planning to buy back.

Echoing similar views, another market expert, who did not want to be quoted, gave an example:

BSE Ltd, in 2019, did a share buyback of over 13 per cent of the equity. Now, that's a solid move for the shareholders because the benefit to them will be significant. On the other hand, if a company plans to announce only 1 per cent of the equity to be bought back, even if the premium is 50 per cent, the gains for the shareholders would be insignificant. Also, when the buyback percentage is high, it will be EPS-accretive because shares bought back will be cancelled; hence, the earnings per share (EPS) will jump.

Buybacks are back on D-Street: Analysts advise focusing on these two factors before chasing them

TVS Motor Company Q1:&nbsp;Shares of TVS Motor Company hit a 52-week high of Rs&nbsp;1,388 apiece on the BSE on Tuesday&nbsp;(July 25), a day after the company released its June quarter numbers (Q1FY24). The auto company said its consolidated net profit increased by 42 per cent to Rs 434 crore in the first quarter ended June 30, 2023, on account of robust sales.&nbsp;The stock eventually ended at Rs&nbsp;1,384.15, up 5.94 per cent.

Total income rose to Rs 9,142 crore in the June quarter as against Rs 7,348 crore in the year-ago period. The company said its overall two-wheeler and three-wheeler sales, including exports, grew by 5 per cent to 9.53 lakh units in the quarter ended June 2023 as against 9.07 lakh units registered in the same period of the 2021–22 fiscal.

<h2 style="color: #252525;">TVS Motor Company Q1 review and outlook</h2>

The company's volume growth, as per analysts, is likely to be driven by a recovery in the domestic two-wheeler market, new products, and a recovery in exports. TVS Motors is enjoying the benefits of economies of scale and operating leverage, which help it sustain earnings before interest, tax, depreciation, and amortisation (EBITDA) margin at a double-digit level. However, TVS Motors earns nearly 40 per cent of its overall EBITDA from the domestic scooter business, making it vulnerable to electric vehicle (EV) disruption, note analysts at Motilal Oswal Securities.

Apart from this, analysts have raised concerns over the company's high investment plans in its subsidiaries. It plans to invest Rs 9 billion in subsidiaries, of which it has invested Rs 2 billion in TVS Credit Services, Rs 1.8 billion in SMEG, and Rs 2 billion in Nortan. Pramod Amthe, a research analyst with InCred Equities, notes that the management’s guidance of Rs 19 billion capex and investment in subsidiaries in FY24F are areas of concern. The brokerage has retained a "REDUCE" rating on the stock due to its rich valuation. The target price is set at Rs 926.&nbsp;

Global brokerage Citi also shares similar views. The brokerage says that TVS Motor has invested heavily in subsidiaries, which resulted in increased debt levels and could negatively impact earnings. It has assigned a "Sell" rating to the stock with a target price of Rs 900. CLSA also has a "SELL" rating on the stock with a target price of Rs 1,190.

Further, the company might face short-term headwinds in its EV portfolio due to a reduction in the FAME II subsidy. But the management is confident that demand will come back in 2HFY24 and is ramping up production capacity to 25,000 per month, analysts say.

"Valuations at 29.9x/26.2x FY24E/FY25E EPS largely reflect its strong earnings growth, as well as the increasing risk of EVs, Motilal Oswal Securities, said in its report released on July 24. It has maintained a "Neutral" rating on the stock with a target price of around Rs 1,300 (premised on ~22x Sep’25E EPS + Rs 125/share for NBFC).

<h2 style="color: #252525;">What is the FAME-II subsidy?</h2>

The central government launched the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles in India (FAME-II) Subsidy Scheme in 2019, in which the electric vehicle manufacturers were provided subsidies by the government for every electric vehicle sold. This was done to enhance the EV market in India.

Earlier, The government was providing about a 40 per cent subsidy, which has been reduced to 15 per cent, effective June 1, 2023.

<h2 style="color: #252525;">TVS Motor's EBITDA margin</h2>

Another point to be considered is the company's EBITDA margin, which has been stuck at nearly 10–10.5 per cent for the past eight quarters due to factors like adverse input commodity costs, a rising mix of e2Ws, and a weak domestic 2W market, among others. TVS Motor is looking forward to improving its margins. This is despite a rising mix of e2Ws, as it is aiming at improving the contribution per unit of e2Ws and also ramping up scale simultaneously, note analysts at ICICI Direct.

The brokerage has maintained an "ADD" rating on the stock with a target price of Rs 1,442, implying 25x FY25E core earnings per share (EPS).

Nirmal Bang Securities has an ACCUMULATE rating on TVS Motors with a target price of Rs 1,339. "We value TVSL at 15x June’25E EV/EBITDA and TVS Credit at 2x P/BV to arrive at a target price (TP) of Rs1,339. We expect TVSL to continue to outperform 2W industry growth in FY24/FY25. We also factor in the margin expansion of 110 bps from the current level till FY25, owing to RM cost tailwinds and product premiumisation," it added.

<h2 style="color: #252525;">TVS Motor Company's share price</h2>

In the past 12 months, the stock has rallied around 50 per cent, Trendlyne data show. In comparison, the benchmark Nifty50 index has risen 18 per cent.

TVS Motor Company Q1:&nbsp;The company said its overall two-wheeler and three-wheeler sales, including exports, grew by 5 per cent to 9.53 lakh units in the quarter ended June 2023 as against 9.07 lakh units registered in the same period of the 2021–22 fiscal.


TVS Motor Company posts decent Q1 numbers, but there are concerns. Read on

Infosys Q1 results review:&nbsp;In a rude shock, India's second-largest IT services firm, while announcing its Q1FY24 results, sharply lowered its FY24 revenue guidance to 1.0 per cent - 3.5 per cent in constant currency (CC) terms, compared to 4 per cent -7 per cent guided in the previous quarter. The substantial cut in the guidance is mainly attributed to lower-than-expected volume and discretionary spending, delays in decision-making, and push-outs in anticipated mega deals.

In the opening deals on Friday, the stock tumbled 10&nbsp;per cent. It eventually ended at Rs&nbsp;1330.40, down 8.18 per cent on the BSE.

Analysts tracking the stock have a mixed stance on it&nbsp;but maintain that the steep cut in the FY24 revenue outlook was surprising and is a concern. For instance, Motilal Oswal Securities, in its earnings review note, said," While the guidance cut is concerning and should be negative for the share price&nbsp;in the short term (partially due to the 11% gain in the last month), we view the miss as more of a perception issue than an operational one as the earlier guidance was too optimistic in the current environment."

The brokerage added, "We lower our below-guidance FY24 estimates (earlier at 3.8 per cent YoY CC) by 120 basis points (bps) despite the 325 bps cut in guidance at the mid-point, to take into account the weaker demand commentary and project delays. We take comfort in the current 1Q-4QE revenue growth run rate estimate for Infosys, which is similar to its peers, despite lower FY24E revenue growth of 2.6 per cent YoY CC."

The brokerage has maintained a "BUY" call on the stock with a target price of Rs 1,600 (10 per cent up from yesterday's close).

<h2><a href="https://www.zeebiz.com/companies/news-infosys-q1-results-net-profit-comes-in-at-rs-5945-crore-check-other-details-245206">Infosys Q1 Results: Net profit slips 3% QoQ to Rs 5,945 crore; FY24 revenue guidance slashed to 1.0%-3.5%</a></h2>

On the contrary, IDBI Capital has downgraded the stock to HOLD from BUY. In its review, the brokerage wrote, "Infosys continues to witness headwinds across its client bucket mainly led by a slowdown in discretionary spend. Further, near-term weakness in Retail, Financial services, hi-tech, and Communication (60% of the portfolio) will further keep revenues under pressure."

In addition, despite winning robust large deals (up 10 per cent QoQ US$2.3 bn) with 56 per cent net new, delays in conversion, project ramp-downs, and ramp-ups are expected to impact revenue growth. "We believe that with the improvement in macros, the company could witness improved growth in the longer run. Hence, we expect FY25E revenues to increase by 9.5% YoY."

It has set a target price of Rs 1,440.

Nirmal Bang Securities remains bearish on the stock as well as the sector. "We have been negative on the stock and the sector for the last 15 months. We continue to be cautious even now, as we believe the worst on the macro front is ahead of us and not behind us," it said in the Q1 results review report.

The brokerage said it suspects its as well as consensus FY25 earnings may not be as robust as expected as the US recession gets pushed back into 2024. It has reiterated ‘SELL’ on Infosys with a slightly higher target price (TP) of Rs 1,206, rolling forward valuation to June 2025E EPS while keeping multiple at 17.4x, a 10 per cent discount to that of TCS.

Infosys Q1 results review:&nbsp;The substantial cut in the guidance is mainly attributed to lower-than-expected volume and discretionary spends, delays in decision-making, and push-outs in anticipated mega deals.


Infosys tumbles 9% as FY24 revenue guidance lowered sharply; should you buy, sell, or hold?

Sheela Foam share price: Shares of Sheela Foam (SFL), the Sleepwell mattress maker, jumped as much as 14.76 per cent to hit a high of Rs 1,363.55 apiece on the BSE on Tuesday (July 18) in the opening deals. The stock eventually settled at Rs 1,236.05 on the BSE, up 4 per cent.

The stock was in demand after the company announced two simultaneous deals: a controlling stake in Kurlon Enterprises Limited (flagship brand Kurl-on—Mattress of India) and a stake in Furlenco Furniture (India’s fastest-growing online furniture brand owned and operated by "House of Kieraya Private Limited" or "HOK").

SFL is acquiring a 94.66 per cent shareholding in KEL at an equity valuation of Rs 2,150 crore (the cost of acquiring 94.66 per cent is around Rs 2,035 crore). The indicative time period for the completion of the acquisition is by or before November 30, 2023, the company said in its statement.

"SFL is also investing in a 35 per cent shareholding in HOK-Furlenco for an equity valuation of Rs 857.14 crore (the cost of investing in a 35 per cent stake is Rs 300 crore). The indicative time period for the completion of the investment will be by or before August 30, 2023," the company added.

The Furlenco deal will help Sheela Foam enter the fast-growing branded furniture and furniture rental market and provide an opportunity to further diversify its presence even in the furniture sales market and become a full-portfolio company in the segment, Sheela Foam said in its press release.

<h2>Sheela Foam deal: What analysts say</h2>

The rumour earlier was that the deal would be worth over Rs 3,000 crore. However, it is being done for Rs 2,150 crore, which is sentimentally positive. However, even at this price, the deal still looks expensive, vis-à-vis Sheela Foam's own valuation, so it could be value-destructive on a consolidated basis, said Ambareesh Baliga, an independent market expert on the Kurl-on acquisition. This, Baliga added, is because, other than adding some network, Kurl-on won't add much value to Sheela Foam because they are broadly catering to the same set of customers and market segments.

Further, the analyst added that the company (Sheela Foam) is buying a company that was resting on its past laurels (Kurl-On), and that too at a premium. The performance in the last few years has been pathetic. And competition has also increased sharply. Kurl-On, left on its own, would have further contracted in performance.

As regards the acquisition of Furlenco Furniture, the analyst said he was sceptical of the deal. "I think they are making the same mistake that Kurl-on made a few years ago. The mattress business is completely different from the furniture business. It's like cement and steel versus paint. It's like cheese and chalk, though on the face of it, they look like the same funnel. This could be a cash-guzzler for a while. The working capital cycle is much longer. "Just because you are in the mattress business, you expect people who are buying mattresses to also buy cots and other furniture, and that's why you are foraying into this business! It could be a mistake," the analyst said.

On the face of it, it looks complimentary, but it's not.

<h2>Sheela Foam's share price</h2>

Shares of Sheela Foam debuted on bourses on December 9, 2016. Over the last three months, the stock has gained 16.5 per cent. The company's issue price was Rs 730. Since its listing, the stock has given 134 per cent returns (including today's high).

Sheela Foam share price:&nbsp;The Furlenco deal will help Sheela Foam to enter the fast-growing branded furniture and furniture rental market


Sheela Foam acquires Kurl-On, Furlenco Furniture; are the deals good? Here's what market expert says

Stocks in focus:&nbsp;Shares of online gaming and casino companies took a heavy beating on Wednesday, July 12, a day after the Goods &amp; Services Tax (GST) Council agreed to levy a 28 per cent tax on online gaming, casinos, and horse racing. The council said the tax would be levied at full face value.

At the time of filing this report, Delta Corp stock was trading around 22 per cent lower at Rs 192.80 on the BSE. The stock tanked as much as 30 per cent to Rs 172.80 earlier in the trade. OnMobile Global was trading nearly 4.5 per cent lower at Rs 75.85. The stock tumbled as much as 7.78 per cent to Rs 73.21 on the BSE. Nazara Tech shares sank as much as 14.3 per cent to Rs 605 on the BSE. However, the stock recovered later but was still trading nearly 4 per cent lower at Rs 680.30 on the BSE.

After the GST Council's announcement, Nazara Tech today issued a clarification in which it said that this tax, once implemented, will apply only to the skill-based real-money gaming segment of its business. "The contribution of this segment to our overall consolidated revenues for the financial year FY23 was 5.2 per cent," the company added.

<h2 style="color: rgb(37, 37, 37);">GST rate hike: What industry says</h2>

Post-decision, online gaming companies said on Tuesday that levying 28 per cent GST will limit their ability to invest in new games and impact cash flows as well as business expansion. The All India Gaming Federation (AIGF), which represents companies like Nazara, GamesKraft, Zupee, and Winzo, said the decision by the council is unconstitutional, irrational, and egregious.

"The decision ignores over 60 years of settled legal jurisprudence and lumps online skill gaming with gambling activities. This decision will wipe out the entire Indian gaming industry and lead to lakhs of job losses, and the only people benefiting from this will be anti-national illegal offshore platforms," AIGF CEO Roland Landers said.

<h2 style="color: rgb(37, 37, 37);">Delta Corp, Nazara Tech shares: Should you stay away?</h2>

Analysts say the decision is a big blow to the companies, and hence, people should exit the stocks whenever they get an opportunity. "I don't think the government will reverse the tax rates; thus, it's a big blow to the entire industry not only because the cost of participation will increase but also in terms of the operations of the companies," said G Chokkalingam, Founder and Managing Director at Equinomics Research.

The expert further said that Delta Corp will be impacted the most due to the hike in GST rates. Delta Corp is engaged in the casino (live, electronic and online) gaming industry in India. Incorporated in 1990 as a textiles and real estate consulting company, Delta Corp has now evolved into diversified segments like Casino gaming, Online gaming, hospitality, and Real estate.

Some of the stocks' valuations were already stretched, and hence there is no growth trigger as of now. The premium that these companies received was because of their growth story. Now, that kind of growth will not be there. In fact, there will be degrowth as not only the earnings will shrink, but the price-to-earnings (P/E) multiple will also shrink badly for companies like Delta Corp. Hence, investors should shun these stocks, Chokkalingam added.

AK Prabhakar, the Head of Research at IDBI Capital, shares similar views. In his words, "We don't track gaming because there's always a risk of regulatory issues. Also, this GST rate hike was bound to happen. We don't have any coverage. We will stay away and advise our clients to stay away from these stocks too," the expert added.

Stocks in focus:&nbsp;Nazara Tech shares sank as much as 14.3 per cent to Rs 605 on the BSE. However, the stock recovered later but was still trading nearly 4 per cent lower at Rs 680.30 on the BSE.


Delta Corp, Nazara Tech: Online gaming, casino stocks crash; should you stay away?

TCS Q1 results preview:&nbsp;Tata Consultancy Services (TCS) is slated to announce its June quarter numbers for the current fiscal (Q1FY24) on July 12 and thus officially kickstart the earnings season of India Inc. Although it is widely known that TCS, along with other Tier-1 IT companies, will post sombre numbers for the three-month period, the company's forward-looking statement and management commentary on attrition and hiring will be keenly watched. These aside, there are speculations that the K Krithivasan-led company may also announce a share buyback. It must be noted that this will be the first quarterly results announcement under the new CEO, K Krithivasan. His predecessor, Rajesh Gopinathan, tendered his resignation in March of this year.

Here's a list of key things to watch out for in the IT bellwether's quarterly results:

<h2 style="color: rgb(37, 37, 37);">Financials</h2>

TCS is expected to report revenue of $7,300 million in US dollars. In rupee terms, the company's revenue is seen at Rs 59,966.6 crore, up 13.7 per cent year-on-year (YoY) and 1.4 per cent on a sequential basis. Its earnings before interest and tax (EBIT) are seen at Rs 14,170.1 crore, up 16.3 per cent YoY but down 2.2 per cent on a quarter-on-quarter (QoQ) basis, as per Nirmal Bang Securities. The EBIT margin is seen at 23.1 per cent for the quarter under review compared to 24.5 per cent in the previous quarter. In the year-ago period, the margin was 23.6 per cent. Profit after tax (PAT) is pegged at Rs 10,855.5 crore, up 14.5 per cent YoY and down 4.7 per cent QoQ, the brokerage added.

<h2 style="color: rgb(37, 37, 37);">Deal wins</h2>

The total contract value (TCV) of deals won during the quarter and the timeline of deal closures and deal pipelines will be keenly watched by all the stakeholders. During FY23, the company’s order book stood at $34.1 billion, of which Q4 was $10 billion, led by an all-time high number of large deals.

<h2 style="color: rgb(37, 37, 37);">Commentary on attrition and hiring</h2>

As of late, TCS has drawn a lot of flak for its hiring process. Last month, Tata Sons Chairman N Chandrasekaran said it took action against six employees after finding them guilty of accepting favours from certain staffing firms in the appointment of contractual workers. He said the company received two separate whistleblower complaints—one pertaining to the appointment of business associates or contractual workers in the US, and one in India—in late February and March, after which it investigated the allegations. Chandrasekaran said he cannot quantify the favours these employees got, but the banned employees behaved in such a way that they were favouring certain firms.

During FY23, the company added a net of 22,600 employees, of which 821 were in Q4. This took the total number of its payrolls to 6,14,795 from 150 nationalities, with women constituting 35.7 per cent of the workforce. The software major said its attrition rate stood at 20.1 per cent, marginally better than the previous quarters.

<h2 style="color: rgb(37, 37, 37);">Strategy of new CEO</h2>

The company's new CEO's strategy will be keenly watched. In his prior role, Krithi was the Global Head of the Banking, Financial Services, and Insurance (BFSI) Business Group and played a key role in building deep customer relationships and mindshare as well as market positioning across geographies, TCS said. Krithi has a bachelor’s degree in Mechanical Engineering from the University of Madras and a master’s degree in Industrial and Management Engineering from IIT Kanpur. He has been with TCS for over three decades.

<a href="https://www.zeebiz.com/companies/news-it-sector-q1-fy24-preview-tcs-infosys-hcl-tech-tech-mahindra-deal-wins-nifty-it-attrition-ai-242477">ALSO READ: IT sector Q1FY24 preview: No positive surprises seen; Infosys may tighten revenue guidance</a> 
&nbsp;

<h2 style="color: rgb(37, 37, 37);">Performance of different verticals and geographies</h2>

TCS' performance in Technology &amp; Services, BFSI, Manufacturing, Communications &amp; Media, Retail and Consumer and Life Sciences and Healthcare will be closely tracked. Growth in Q4 was led by Retail and CPG (+13 per cent) and Life Sciences and Healthcare (+12.3 per cent). Other verticals grew in the single digits. Technology &amp; Services grew 9.2 per cent, BFSI grew 9.1 per cent, Manufacturing grew 9.1 per cent and Communications and Media grew 5.3 per cent.

<h2 style="color: rgb(37, 37, 37);">Share buyback announcement?&nbsp;</h2>

"We believe TCS could announce a buyback as well," Jefferies said in a note on June 30. If the company announces it, it will be its fifth buyback in six years. "Commentary around the nature or tenure of deals, sales and deal cycles, pricing, vendor consolidation, and attrition would garner attention," it said. "While positives should be taken with caution, negatives could raise concerns." A share buyback, if announced, would be TCS' fifth in six years, the foreign brokerage added.

<h2 style="color: rgb(37, 37, 37);">TCS Share price</h2>

Over the last three months, the share price of TCS has risen merely 2 per cent. In comparison, the NSE's Nifty50 has rallied 10 per cent, Trendlyne data show.

TCS Q1 results preview:&nbsp;It must be noted that this will be the first quarterly results announcement under the new CEO, K Krithivasan. His predecessor, Rajesh Gopinathan, tendered his resignation in March of this year.


TCS to release Q1 results today: Five key things to watch out for

IT sector Q1 preview:&nbsp;Analysts, in unison, are of the view that most IT services companies will report a weak set of numbers for the quarter ended June 30, 2023 (Q1FY24). Q1 happens to be the strongest quarter for the IT sector; however, this time it’s going to be different given the challenging macro conditions. A soft discretionary spending environment, combined with the pullback of projects in financial services and telecom, is expected to impact the revenue growth of the companies. This, coupled with project ramp downs and a lower conversion of total contract value (TCV) to annual contract value (ACV), will impact near-term growth, they add.

Besides, the EBIT margins of the companies are expected to remain under pressure, and there is a possibility that Infosys may tighten its revenue guidance.

Here’s a look at the key points in a little more detail:

<h2 style="color: rgb(37, 37, 37);">Macro-economic conditions</h2>

A slowing macro is feeding its way into the performance of clients of IT companies and, consequently, spending. The pullback in discretionary spending and programme cancellations will lead to a weak FY2024, notes Kotak Institutional Equities.

"The list of challenged verticals has increased, with heightened impact in financial services, telecom, and hi-tech. We do not expect a recovery in discretionary spending in CY2023. However, what has changed is the growing pipeline of large and mega-deals. Some IT companies have made deals to this effect. Pickup in large deal momentum is critical for 2H growth and laying the foundation for FY2025 growth," they add.

<h2 style="color: rgb(37, 37, 37);">Margin Outlook</h2>

"Most of the large caps are expected to report a flat to -118 bps decline in margins due to wage hikes and the absence of operating leverage. However, among mid-caps, most of them will report a +60 bps to +85 bps improvement in margins. The only exception is Coforge (-238 bps) due to wage hikes and visa costs," wrote Devang Bhatt and Dhawal Doshi, research analysts at IDBI Capital, in their Q1 earnings preview note.

Nirmal Bang Securities said that while pyramid, cross-currency, higher utilisation, easing of attrition and backfilling costs, lower sub-subcontracting costs, and a lower quantum of salary hikes, among others, will be tailwinds, a lack of operating leverage, rebadging, higher travel and facilities costs, transition costs from cost optimisation projects, and likely pricing pressure will act as headwinds.

Rebadging means the acquisition/legal transfer of ownership of the relevant IT staffing resources from the originating, or incumbent company over to the rebadging entity.

<h2 style="color: rgb(37, 37, 37);">Revenue Outlook</h2>

The revenue of Tier-1 companies is expected to remain muted on account of weak macroeconomic conditions, cuts in discretionary spending, and project delays. "We expect revenue growth of Tier-1 companies to be in the range of -2.5 per cent to +0.9 per cent QoQ in constant currency terms (CC). Revenues of Tier-II players (excluding L&amp;T Tech Services) are expected to fall within a wider range of -1.2 per cent to +3.3 per cent QoQ in CC terms. LTTS is expected to grow 12.2 per cent QoQ in CC terms, primarily attributable to the Smart World &amp; Communication (SWC) acquisition," said Motilal Oswal Securities in an earnings preview report.

<h2 style="color: rgb(37, 37, 37);">Guidance Outlook</h2>

In terms of guidance," we expect Infosys to narrow its top-end direction to 4-6 per cent from 4–7 per cent. We expect Wipro to guide 0 to -1 per cent QoQ revenue guidance for Q2FY24E," said IDBI Capital.

Kotak Institutional Equities also expects Infosys to tighten its revenue growth guidance range to 4-6 per cent from 4-7 per cent earlier. Further, HCL Tech will likely retain 6–8 per cent revenue growth guidance, it adds. Additionally, the brokerage expects Infosys and HCLT to deliver 5 per cent and 6.3 per cent revenue growth for FY2024E, respectively.

"We expect both companies to retain margin guidance bands. Wipro’s quarterly revenue outlook for the September 2023 quarter will be muted at (-)1% to 1% range," it said further.

<h2 style="color: rgb(37, 37, 37);">Deal wins</h2>

With the current macro, the pushing back of discretionary spending, and project delays and cancellations, Nirmal Bang Securities believes that almost all companies will see a QoQ and YoY decline in deal TCV in 1QFY24. Another issue lies with the conversion of TCV to revenue and the quantum of leakages from the signed-up TCV of the prior quarters.

"Leakage has been at higher than normal levels, as we gather from our discussions with companies, though numbers have been difficult to get," the brokerage wrote.

Revenue leakage refers to money that has been earned but not collected, generally because of a lack of awareness on the part of the business.

<h2 style="color: rgb(37, 37, 37);">Other key things to watch out for </h2>

Net hiring, commentary on salary increases in FY24, the extent of deterioration in demand in sub/verticals beyond BFS, Retail, Hi-Tech, and Telecom, an update on generative AI and any projects related to it, strength in Europe, and if it can continue to hold up as was the case throughout FY23, are some of the key monitorable. These aside, commentary on vendor consolidation and cost optimisation projects and their implications for onsite staff will also be closely tracked.

<h2 style="color: rgb(37, 37, 37);">Nifty IT vs. Nifty50 performance</h2>

The Nifty IT index has risen 6 per cent in the past year (from June 30, 2022-June 30, 2023), Trendlyne data show. In comparison, the Nifty50 index has rallied 21.6 per cent during the window.

IT sector Q1 preview:&nbsp;A soft discretionary spending environment, combined with the pullback of projects in financial services and telecom, is expected to impact the revenue growth of the companies. This, coupled with project ramp downs and a lower conversion of total contract value (TCV) to annual contract value (ACV), will impact near-term growth, they add.


IT sector Q1FY24 preview: No positive surprises seen; Infosys may tighten revenue guidance

The current market valuations look attractive, and there are select pockets in the mid-and small-cap space that offer lucrative opportunities, says Anil Ghelani, CFA, Head–Passive Investments and Products, DSP Mutual Fund,&nbsp;in an exclusive interaction with Zee Business’&nbsp;Swati Verma.

On Q4 earnings, Ghelani said it was a mixed bag, with some instances of downgrades in certain stocks and sectors as well. Overall, there has been a downgrade in earnings growth for Nifty50 of around 4-5 per cent. Hence, the broader estimates that people were having that Nifty earnings would grow around 15 to 18 per cent seem a little aggressive at this juncture, he added.

Anil Ghelani has been working with DSP Group since 2003. Previously, he was CIO at DSP Pension Fund Managers. He has also worked at IL&amp;FS AMC and at S.R. Batliboi, a member firm of EY.&nbsp;

Edited excerpts:

The benchmark indices are flirting with all-time highs. FPI inflows hit a nine-month high in May, the GDP print blew past expectations, and GST collections continue to be robust; can we say that India is in a multi-year high cycle? Tell us in detail.

I won’t say it’s in a multi-year high cycle, but it’s definitely in a good cycle. I assess markets with the CFE framework, where C stands for corporate earnings, F for flows, and E for event risks. Let’s take each component one by one. First, corporate earnings. If we look at the last 19 months, i.e., from October 2021 to the present, the Nifty50, or broad market, has remained largely range-bound; however, corporate earnings during the window have risen sharply. For instance, around 2021's end, the earnings per share (EPS) of Nifty50 companies were at Rs 650 levels, which have grown to Rs 850. In percentage terms, the Nifty EPS has increased by 30 per cent during the period. Now, because of this, the price-to-earnings (PE) or valuation of Nifty50 has come down from around 28 times to around 21 times, which makes the market attractive as an investment per se.

Now, let’s understand the F part, i.e., flows. Foreign portfolio investors (FPIs) have turned bullish on India, as we have witnessed some healthy inflows in the last few months. Last year (CY2022), Indian equities witnessed outflows worth 15 to 16 billion dollars. However, this year, the scenario could be different, as there have been inflows of around 5 billion dollars over the last 3–4 months.

Moreover, if we look back around six months, Indian equity markets were trading at around a 90 per cent premium to their peers in other emerging markets. However, as of today, the premium has declined to 45–50 per cent, which is closer to the long-term average. Due to this, FPIs are getting attracted to India.

Besides, GST collections and other high-frequency indicators are steadily improving and are pointing towards good growth, even though certain global markets are not so positive. Thus, FPIs will once again be expected to see India in a positive light.

Finally, the last part is E, which stands for event risks. There is certainly a big risk if suddenly something untoward happens or goes wrong in an unexpected way due to any geopolitical tension or side effects of the sharp interest rate hikes, as it could result in an unexpected outcome.

What’s your view on the mid-and small-cap segments?

Mid- and small-cap stocks have seen a relatively longer period of consolidation or undervaluation. Hence, I believe that it can offer some attractive opportunities, but only in certain pockets. It’s not that kind of market where everything in the mid-and small-cap space will keep rising. That happened in certain periods and could happen in the future as well, but in my view, maybe not in the current situation. It is so because a lot depends on the capital flows in the companies and how these companies' earnings profiles will be impacted. It is quite obvious that not all companies will be able to sustain themselves in a very good way, and not all companies will be able to raise capital for their growth. Therefore, in certain pockets, there will definitely be attractive opportunities.

Will global uncertainty play spoilsport to Indian equities?

As mentioned earlier, it is important to keep global risk events in mind. Let’s assume that even if there are no unexpected risks like a geopolitical crisis, there is still a global growth risk. At present, many European countries have already declared that they are in recession. In the US, too, there is a risk of recession. Hence, it's a risky event for Indian markets too.

That said, there's another angle to global uncertainty. In the last 2-3 years, there has been a question about the stability of many economies, like Russia, Sri Lanka, and most recently, Pakistan. Global investors have suffered massive losses, either due to geopolitical conditions or economic fallout. So, if something unfortunate happens in Russia, Pakistan, or Sri Lanka, then FPIs would have one or two countries less to keep on their radar and maybe increase their allocation to a country like India where there is economic stability, a stable political regime, and a domestic consumption-driven theme. There has been structural growth here. So, in this scenario, it could result in a good opportunity rather than an adverse situation.

What's your view on the fourth-quarter earnings season? What's the one key takeaway from it?

March quarter earnings were a mixed bag. There were some instances of downgrades in certain stocks and sectors as well. Overall, there has been a downgrade in earnings growth for Nifty50 of around 4-5 per cent. Hence, the broader estimates that people were having that Nifty earnings would grow around 15 to 18 per cent seem a little aggressive at this juncture. On a prudent basis, 10–12 per cent corporate growth is a more likely scenario because, as mentioned earlier, in the past 19 months, the Nifty has remained range-bound, but earnings of the Nifty companies have grown about 30 per cent over this period. Hence, there has already been impressive growth.

What investment strategy would you suggest to people looking to invest in equities?

The current market valuations look appealing. In the past 19 months, the market has not gone anywhere, but earnings have increased. Now, certain specific pockets or sectors have the potential to grow. For example, look at mid- and small-cap space. If there is a good focus on quality stocks in mid- and small-cap stocks, it will definitely be very useful. If one is trying to build a strategy to invest in equities today, a prudent mix would include some allocation to large-cap stocks.

However, if one doesn't prefer stocks, I believe they should invest in mutual funds, which are a broader pooled vehicle. For large caps, I would suggest low-cost index funds or ETFs. For mid- and small-cap stocks, allocation in good-quality portfolios whereby one could get a mix of allocation into mid- and small-cap stocks would be a wise decision.

If someone's risk appetite is a bit higher, they can go for a particular sector or thematic funds.

Sectors you are bullish as well as bearish on currently and why

First of all, I am bullish on healthcare. This sector has been undervalued for quite some time, and there is a high chance that it will gradually see a good recovery. Another theme that looks promising is auto and auto-ancillary. Across the board, passenger vehicles, commercial vehicles, and ancillaries are in good shape. The demand these companies are witnessing is encouraging. Just a couple of quarters ago, there was so much noise around electric vehicles (EVs) that they would pose a serious challenge to traditional, established companies. However, nothing of the sort will happen. It must be noted that these established companies, which have a pan-India presence, are also making significant investments in infrastructure and research and development (R&amp;D) for EVs. But as a measure of their balance sheet and their size, it's small. So, it's not very visible. Now, given this scenario, what would be the ideal choice for the majority of people? How many people will prefer a newly launched company, a sort of startup with big advertisements driven by one or two people who are promoters, to a traditional, well-established company with a wide service network, among others?

ALSO READ |&nbsp;<a href="https://www.zeebiz.com/markets/stocks/news-prabhas-starrer-adipurush-releases-today-16-june-2023-can-lord-rama-help-pvr-inox-q1fy24-revenue-up-240366">Adipurush hits screens: Can Lord Rama help PVR-Inox put up a good show in Q1FY24?</a>

The third sector, which is a contra bet, is IT, as everyone is bearish on it at present. In recent times, the sector has seen a sharp correction and has been out of flavour. Many people are negative about it, but structurally, I believe that at current levels, valuations are approaching average multiples, and many companies appear financially healthier and relatively cheaper when compared to their global IT peers. Certain stocks may have a little bit of downside, but on a broader level, it would be a good sector from an investment point of view to bet&nbsp;on a turnaround in the medium to long term.

On the other hand, I am a bit bearish on select banks, non-bank financial companies (NBFCs), and housing finance companies (HFCs) because they have done very well in the recent past. So, there could be some saturation or contraction in the space now.

Passive investments have gathered pace of late; how do you see this?

Not of late, but over the past five years, it has been rising steadily. Today, ETFs and index funds account for close to 16 per cent of the entire mutual fund industry. The world over, this number is about 10–12 per cent. So, India has outpaced the world in terms of percentage. Of course, not in absolute terms, as the Indian market is much smaller, but I believe this is bound to continue rising. By 2025, there are various analysts’ expectations that ETFs and index funds will account for 25–30 per cent of the mutual fund industry.

The reason why people are choosing passive funds is not only due to the cost element but also due to various other factors, such as a recent couple of years of performance history in which many active funds have not been able to outperform the underlying index. I strongly believe that for large and midcap types of allocations, one should definitely consider using passive mutual funds. One can use it as a core allocation in their strategy, and for satellite allocations or for investments where you need regular inflow and outflow, you can use active funds. So, as a complementary strategy, it has started finding a place in everybody’s portfolio, whether it is retail investors, large family offices, or even large institutional investors. Everybody is tracking closely and investing in passive funds.

Some newly listed new-age companies reported decent performance in the March quarter. What's your take on these companies?

Among new-age companies, few have grown from being privately held to entering the listed space. Some of those companies have yet to create a proven business or revenue model that will result in gains or profits. Therefore, it’s challenging to assign valuations to certain companies. Let’s take an example of, say, a fintech company, where one feels it is a technology company and tries to value it like a tech company, but it should not be forgotten that at the core, it is a finance or lending business. So the risks of an NBFC that is in the lending business also need to be incorporated. Hence, it's difficult to give a view at this stage.

Anil Ghelani, DSP Mutual Fund:&nbsp;On Q4 earnings, Ghelani said it was a mixed bag, with some instances of downgrades in certain stocks and sectors as well. Overall, there has been a downgrade in earnings growth for Nifty50 of around 4-5 per cent. Hence, the broader estimates that people were having that Nifty earnings would grow around 15 to 18 per cent seem a little aggressive at this juncture, he added.


EXCLUSIVE | Global uncertainty could aid India; healthcare and auto look promising; IT a contra bet, says Anil Ghelani, DSP Mutual Fund

Adipurush releases today:&nbsp;The much-talked-about film, Adipurush, has hit the screens. The film, which is based on the Hindu epic Ramayana, is on everyone's radar, be it movie buffs, film critics and reviewers, trade analysts, distributors, producers, directors as well as multiplex operators and equity investors. The film, which stars Prabhas, Kriti Sanon, and Saif Ali Khan in crucial roles has already made headlines given huge promotions, as well as record advance booking for its tickets. As per news reports, more than 4.7 lakh tickets have already been sold for its weekend shows.&nbsp;

Taran Adarsh, a movie critic and business analyst, said in his tweet, "#Adipurush revenue from non-national chains as well as mass venues [multiplexes as well as single screens] will be massive... " Also, South India will be HUMONGUS."

Jinesh Joshi, a research analyst with Prabhudas Lilladher, notes that the film performance will be critical for PVR-Inox’s fortunes in 1QFY24E. So far, four movies have crossed the net box office collection (NBOC) barrier of Rs 1 billion in 1QFY24E and if Adipurush is able to net upwards of Rs 5 billion, "we believe PVR-Inox will report a better performance than 4QFY23 (managed pre-IND AS EBITDA breakeven)," the analyst said in a report released on June 15.&nbsp;

[[{"fid":"247357","view_mode":"default","type":"media","link_text":null,"attributes":{"alt":"Adipurush","title":"Adipurush","height":400,"width":1312,"class":"media-element file-default"}}]]

The report adds that even if Adipurush clocks Rs 5 billion, the NBOC of top-grossers would be lower than the previous quarter. However, the brokerage still believes that 1QFY24E can be better than 4QFY23 due to the following reasons -

<ul>
	<li>Bhola was released on March 30 and netted Rs 800 million. Hence, the spillover happened in 1QFY24E.</li>
	<li>A few movies such as Zara Hatke Zara Bachke (Rs 610 million), Guardians of the Galaxy (Rs 494 million), Virupaksha (Rs 640 million), and Transformers-Rise of the Beast (Rs 312 million) have done well aiding collections for the quarter.</li>
	<li>Flash is set to release on June 16 and will further boost NBOC.</li>
	<li>4QFY23 had 3 regional movies from the South. However, NBOC's share of multiplexes for Southern movies is typically lower as that market is dominated by single screens.</li>
</ul>

Hence, considering these factors the brokerage believes that PVR-INOX will post a better performance for the ongoing quarter (April-June period). It has retained a 'BUY' rating on the stock with a target price of Rs 1,879.

<h2>PVR-Inox merger&nbsp;</h2>

In March 2022, PVR and INOX Leisure announced the merger to create the largest multiplex chain in the country with a network of more than 1,500 screens to unlock the opportunities in tier III, IV and V cities, besides in the developed markets. Earlier, PVR and Inox Leisure used to operate as separate entities. However, the rise of over-the-top (OTT) platforms and the COVID-19 pandemic led to the merger of the two multiplex chains. The name change post scheme of amalgamation between INOX Leisure and PVR&nbsp; came into effect on April 20, 2023, and since then 'PVR Limited' is known as 'PVR INOX Limited'.

<h2>PVR-Inox's Q4 numbers</h2>

The cinema exhibitor reported a consolidated net loss of Rs 333.99 crore for the fourth quarter that ended on March 31, 2023. The company posted a net loss of Rs 105.49 crore in the January-March period a year ago. Its revenue from operations was at Rs 1,143.17 crore during the March 2023 quarter. It was Rs 536.17 crore in the year-ago period.

During the quarter ending March 2023, PVR Ltd and INOX Leisure merged and created a new identity PVR Inox Ltd. The merger was effective from February 6, 2023, hence the results are not comparable, the company said in a regulatory filing.&nbsp;

<h2>Other analysts' views</h2>

Analysts at ICICI Securities, in its Q4 review note, mentioned that PVR’s share price has been flat over the past five years and hence they believe that with the strong content pipeline, recovery will be seen in the stock, although the timing is uncertain. Near-term monitorable is big-ticket content performance, which has seen inconsistency in performance, post-COVID.&nbsp;

For the medium term, a key trigger will be the fructification of synergy benefits, they added. The brokerage maintained a "BUY" rating on the stock with a target price of Rs 1,640. Key risks, according to the brokerage are, delay in ad revenues recovery and continued volatility in content performance.

IDBI Capital has also a 'BUY' rating on the stock with a target price of Rs 1,740. In its Q4 review note, the brokerage said, "We believe in the near term there is still uncertainty on content and hence we are now keeping occupancy levels at 25 per cent (below the pre-covid average of 35 per cent). We believe that a certain amount of occupancy loss can be managed by improving pricing &amp; cost rationalisation. Hence, we expect margins to reach pre-COVID levels of 18 per cent in FY25E."

At present, PVR-Inox has 1,689 screens across 115 cities (India and Sri Lanka) with 361 properties and an aggregate seating capacity of 3.59 lakh seats.

<h2>PVR-Inox's financial snapshot</h2>

[[{"fid":"247362","view_mode":"default","type":"media","link_text":null,"attributes":{"alt":"PVR-Inox-1","title":"PVR-Inox-1","height":900,"width":1200,"class":"media-element file-default"}}]]

&nbsp;

[[{"fid":"247363","view_mode":"default","type":"media","link_text":null,"attributes":{"alt":"PVR-Inox-2","title":"PVR-Inox-2","height":900,"width":1200,"class":"media-element file-default"}}]]

&nbsp;

Source: Screener.in

<h2>PVR-Inox share price</h2>

The stock ended over 3 per cent lower at Rs 1,450.45 on the BSE on Friday. Its&nbsp;52-week high level is Rs 2,211.55, which was touched on August 4, 2022 (before the merger).

Adipurush releases today:&nbsp;The film, which stars Prabhas, Kriti Sanon, and Saif Ali Khan in crucial roles has already made headlines given huge promotions, as well as record advance booking for its tickets. As per news reports, more than 4.7 lakh tickets have already been sold for its weekend shows.&nbsp;


Adipurush hits screens: Can Lord Rama help PVR-Inox put up a good show in Q1FY24?

IEX share price: Indian Energy Exchange (IEX) shares have been reeling under immense selling pressure. The company's March quarter results were also sombre, as it posted an almost flat consolidated net profit of Rs 88.33 crore for the March 2023 quarter. It had reported a consolidated net profit of Rs 88.40 crore in the year-ago period. Total income rose to Rs 129.58 crore from Rs 128.44 crore in the same period a year ago, while it achieved an overall trade volume of 26.1 BUs (billion units) as against 27 BUs a year ago due to supply-side constraints. For the full fiscal year, too, the volumes declined. IEX traded 96.8 BU during FY22–23 as compared to 101.9 BU, mainly due to sell-side liquidity constraints.

Besides, reports that the power ministry has directed the Central Electricity Regulatory Commission (CERC) to undertake the ‘Market Coupling’ mechanism for spot power trading dented investor sentiment further as investors started selling the shares aggressively. On Thursday, the stock ended nearly 9 per cent lower at Rs 136.50 on the BSE, and <a href="https://www.zeebiz.com/markets/stocks/news-indian-energy-exchange-share-price-nse-bse-market-coupling-effect-sensex-nifty-239290">on Friday, the stock continued to bleed</a>. It slipped another 15 per cent and hit a fresh 52-week low.

So, what is the cause of worry for investors, and what should one do with the IEX shares now? Let's understand this one by one.&nbsp;

<h2 style="color: rgb(37, 37, 37);">What is Indian Energy Exchange and what does it do?&nbsp;</h2>

Indian Energy Exchange is India’s leading energy marketplace, providing a nationwide automated trading platform for the physical delivery of electricity, renewables, and certificates. IEX is approved and regulated by the Central Electricity Regulatory Commission and has been operating since June 27, 2008, as per the company's website. IEX's shares started trading on exchanges (NSE and BSE) in October 2017.

<h2 style="color: rgb(37, 37, 37);">All about Market Coupling</h2>

Market coupling is the process whereby collected bids from all the power exchanges are matched, after taking into account all bid types, to discover the uniform market clearing price for the day-ahead market or real-time market. This is done to harmonise different systems of electricity exchanges and, in particular, to reduce price differences. So, under the market coupling mechanism, one price will be set for all the exchanges. Currently, the price discovery on all the platforms is different. After the implementation of this mechanism, all these exchanges will be platforms just to receive the bids, explains Zee Business Research.

<h2 style="color: rgb(37, 37, 37);">What's the current status?</h2>

At present, around 94 per cent of spot market transactions take place on IEX. Hence, it has a clear monopoly. Under the market coupling mechanism, orders received from different power exchanges will be added to pass only one algorithm. As per Zee Business Research, this mechanism will help new companies enter the exchange space, and the dependence on IEX to decide the power price will reduce. This will have a huge impact on IEX's volumes. In addition, it is also believed that it will kill innovation.

<h2 style="color: rgb(37, 37, 37);">Risk to IEX's business model</h2>

According to Zee Business Research, the market coupling mechanism poses risks to IEX's businesses in the day-ahead market (DAM) and real-time market (RTM) segments. At present, IEX enjoys a 90 per cent market share in total market volume. Further, IEX may lose its status as the most trustworthy exchange for price discovery. In the worst-case scenario, the volume share of DAM/RTM segments can go down to 33 per cent from 100 per cent. Moreover, once this mechanism comes into effect, bidders won't have any reason to choose IEX, the research desk further said.

<h2 style="color: rgb(37, 37, 37);">When will this be implemented?</h2>

As per some analysts, the implementation will take at least three years. Tasks such as draft consultation papers, discussions with stakeholders, and other approvals are pending.

<h2>EXCLUSIVE | IEX's CMD's reply</h2>

In an exclusive interaction with Zee Business, the exchange's CMD, Satyanarayan Goel, said that the market coupling matter will be taken care of by CERC, and the regulator will take a decision on it after a discussion on the same. The CMD further said that there is a time for a final decision as all stakeholders will share their opinions on it.

<h2 style="color: rgb(37, 37, 37);">What should you do with the shares? Analysts' views</h2>

Sameet Chavan, Head of Research, Technical, and Derivatives, at Angel One Ltd., says, "Stock prices tumbled in the last couple of sessions after the reports said that the power ministry has directed the CERC to undertake the ‘Market Coupling’ mechanism for spot power trading. Technically speaking, we do not see any near-term relief in the prices, as the decline is backed by humongous volumes. The stock is trading at a new two-year low, and hence, we advise traders to stay away from the stock until things stabilise."

Antique Stock Broking has double-downgraded IEX shares to ‘sell’ from ‘hold’ with a revised target price of Rs 105 per share against Rs 138 apiece earlier, while Axis Securities has also downgraded the stock to ‘sell’ from ‘buy’ with a revised target of Rs 111 per share from Rs 180 per share earlier.

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IEX share price:&nbsp;At present, around 94 per cent of spot market transactions take place on IEX. Hence, it has a clear monopoly


IEX shares roiled: What is 'Market Coupling' mechanism and what should one do with the stock?

Thangamayil Jewellery share price NSE: Shares of Thangamayil Jewellery rose over Rs 42.55, or 2.86 per cent, to Rs 1,530 apiece on NSE, up from Friday's close of Rs 1,487.45, in the morning deals to hit a new 52-week high of Rs 1,548 for the sixth session straight. Thangamayil Jewellery shares finished up 0.51 per cent at Rs 1,495 apiece on NSE. On Friday, Thangamayil Jewellery shares gained nearly 6 per cent to make a 52-week high of Rs 1,500 per share from their previous closing of Rs 1,415.05. The counter has been hitting back-to-back 52-week highs in the last five trading sessions.

Thangamayil Jewellery is a retail jeweller of gold, silver, and diamond jewellery with 54 stores across Tamil Nadu.

<h2>Dividend, bonus stock: Thangamayil Jewellery dividend, Thangamayil Jewellery bonus issue&nbsp;</h2>

The Jeweller on May 22 announced a final dividend of Rs 6 per equity share of Rs 10 each, i.e., a 60 per cent payout to its shareholders. The company's communiqué said, "Dividend recommended by the Board: The Board has recommended a final dividend of Rs 6 per equity share of Rs 10/- each (60 per cent), subject to the approval of shareholders in the ensuing Annual General Meeting."

The payment date, if approved, will be announced at the Annual General Meeting, which will be held on July 24. Moreover, the board has also recommended the issue of bonus shares at a ratio of 1:1 to the existing shareholders.

The company on BSE issued a clarification with respect to the announcement dated 22-May-2023, regarding the Board recommendation to issue Bonus Shares. The filing said, "On basis of the above the Company is required to clarify the following: 1. Whether bonus is out of free reserves created out of profits or share premium account;2. Details of share capital - pre and post bonus issue;3. Free reserves and/ or share premium required for implementing the bonus issue;4. Free reserves and/ or share premium available for capitalization and the date as on which such balance is available;5. Whether the figures are audited;6. Estimated date by which such bonus shares would be credited/dispatched. The response of the Company is awaited."

<h2>Thangamayil Jewellery share price history</h2>

The stock has rallied nearly 50 per cent in the last 12 months (till June 2, 2023 closing). The stock has given a multi-bagger return of over 200 per cent in the last 5 years to its investors (since June 4, 2018), Trendlyne data show. Thangamayil Jewellery's market capitalisation stands at Rs 2,092.24 crore as of now.

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Multi-bagger stocks: The stock has rallied nearly 50 per cent in the last 12 months (till June 2, 2023 closing). The stock has given a multi-bagger return of over 200 per cent in the last 5 years to its investors (since June 4, 2018), Trendlyne data show.


This jewellery stock hits 52-week high for 6th session in a row, has given over 200% returns in 5 years

Banking sector outlook: Bank&nbsp;stocks were in the limelight on Monday (May 29) as the majority of the scrips gained in the trade. The Nifty Bank index hit a fresh lifetime high of 44,483.35 during the day before settling at 44,311 points, up 0.67 per cent against Friday's close of 44,018. Its previous lifetime peak was 44,151.80, which was touched on December 14, 2022. Of 12 components, 10 ended in green and the rest two in red. AU Small Finance Bank (up over 2 per cent) was the top gainer on the index, followed by SBI, IndusInd Bank, and Bandhan Bank.&nbsp;

In comparison, the benchmark S&amp;P BSE Sensex settled at 62,846.38, up 345 points, or 0.55 per cent while the NSE's Nifty ended&nbsp;at 18,598.65, up 99 points, or 0.54 per cent.

Market analysts say that the banking sector will continue to outperform all other sectors in the fiscal 2023-24 and investors should pick quality names for long-term investment. AK Prabhakar, Head of Research at IDBI Capital Markets &amp; Securities, said, "I am positive on select bank stocks. There are certain names whose valuations are very attractive. For example, HDFC Bank. The private sector lender has become very aggressive. In their commentary, they said it will open 1,500 branches each in the next two years. At the bourses, HDFC Bank has not done anything in the last 2-3 years... it has not shown any significant move. Bank Nifty may have hit a fresh high but this stock has not outperformed the index. Hence, there is enough steam in the stock," Prabhakar added.

Further, the market expert said he was positive on&nbsp;IndusInd Bank. Valuation-wise, it is very attractive, he said. He was also bullish on Federal Bank.

In the PSU bank space, the market expert finds Bank of Baroda and SBI attractive. Investors should buy these stocks at current levels. "Valuation-wise, Bank of Baroda is the most attractive stock. Pick any financial metric and Bank of Baroda will emerge as the most efficient PSU bank. It competes with private banks," the market expert added.

Among NBFCs, Shriram Transport and Sundaram Finance are very attractive, Prabhakar said.

G Chokkalingam, Founder and Managing Director, Equinomics Research, agrees. The analyst said he has been bullish on the banking sector for quite some time. "It has outperformed all other sectors at least for the last two quarters and I believe it will continue to outperform in the next 1-2 quarters," he said. The analyst gave three reasons behind this optimism. They are -

<ul>
	<li>Record credit growth: Chokkalingam said banking credit growth has hit a record high...it is growing at 15 per cent which is close to a 10-year high.&nbsp; As per a report by Care Ratings, issued on May 23, 2023, "Credit offtake rose by 15.5 per cent year on year (y-o-y) for the fortnight ending May 5, 2023. In absolute terms, credit offtake expanded by Rs 18.6 lakh crore to Rs 138.6 lakh as of May 5, 2023. The growth has continued to be driven by personal loans, NBFCs, and higher working capital requirements.&nbsp;</li>
	<li>Asset quality improves: The second reason is a significant decline in banks' bad loans. The net non-performing assets (NPAs) have come down drastically for most of the banks in the last 2-3 quarters. The quality of the assets is at a 10-year high, the expert notes.&nbsp;</li>
	<li>End of the rate-hike cycle: Chokkalingam further said that India is in the final legs of the interest rate hike. "We are set for the reversal of the interest rate cycle which is a big positive for the banking sector because it will boost the investment income. There would be a write-back of depreciation provision made on the bonds, and their holding. So, there will be a lot of significant income from the investments," the expert added.</li>
</ul>

America may do one or two hikes - 25/50 bps but in India, "either we have already hit the peak or with another 25 bps, we will hit the peak because retail and wholesale inflation have come down dramatically. So, unless monsoon fails miserably, the banking sector will be the best-performing sector in both Sensex and Nifty, among all the sectors in the 2023-24 financial year," the analyst added.&nbsp;

Asked about specific names the expert is bullish on, he replied HDFC Bank and Bank of Maharashtra. Chokkalingam said Bank of Maharashtra imitates HDFC Bank, in terms of quality and parameters. The only difference is that it is small in size. The analyst also clarified that he doesn't own these stocks in his portfolio.

Bank stocks outlook, May 29, 2023:&nbsp;The Nifty Bank index hit a fresh lifetime high of 44,483.35 during the day before settling at 44,311 points, up 0.67 per cent against Friday's close of 44,018. Its previous lifetime peak was 44,151.80, which was touched on December 14, 2022.&nbsp;


Bank stocks will continue to outperform in FY24; HDFC Bank, BoB, Bank of Maharashtra top picks: Analysts

Stock Market Expert View:&nbsp;The mid-cap and small-cap indices are still 10-15 per cent away from their all-time high levels and hence offer a lot of bottom-up stock-picking opportunities, says Gaurav Dua, Head – Capital Market Strategy, Sharekhan by BNP Paribas, in an exclusive interaction with Zee Business' Swati Verma. However, Dua advises, it would be wise to focus on quality rather than chase momentum or speculative stocks. 
&nbsp; 
Further, Dua notes that IT services stocks have bounced back from oversold territory, but they are unlikely to sustain the uptrend in the next few quarters because of the uncertain demand environment. Also, the valuations are not cheap given the muted growth expectations for FY 2024–25, the analyst opines. 
&nbsp; 
Below are the edited excerpts - 
&nbsp; 
What's your view on the current market? Are you comfortable with the valuations? 
&nbsp; 
Nifty has consolidated in a broader range of 2,000 points within 16,000–18,000 levels for close to 20–22 months now. The time correction has led to valuation multiples coming down from the heady levels of 25x one-year forward earnings to around 18.5x now, which is at a slight premium to long-term average valuation multiples. Additionally, the Indian market premium to MSCI China and MSCI Asia (ex-Japan) has also normalised towards the long-term average level. Hence, we are not too concerned about valuation at the Nifty level. 
&nbsp; 
However, the scenario is different in the case of broader markets, where the mid-cap and small-cap indices are still 10-15 per cent away from their all-time high levels and offer a lot of bottom-up stock-picking opportunities. But it would be wise to focus on quality rather than chase momentum or speculative stocks. 
&nbsp; 
What are the factors (both micro and macro and domestic and global) that will influence equities going ahead? 
&nbsp; 
On the domestic side, the progress of the monsoons and the trend in consumer spending are immediate data points to watch out for by investors. Globally, the recent data also indicates that the aggressive rate hikes are beginning to manifest in a possible recession in some of the large economies in Europe. Recently, German economic growth has turned negative, and other countries could follow suit. The extent of the slowdown (soft or hard landing) and the monetary policy response to the same would influence the market direction in the coming months or quarters. 
&nbsp; 
The earnings season is on its last legs. What's your takeaway from the March quarter numbers? Also, your estimate for FY24 Nifty earnings. 
&nbsp; 
Despite the tough macro environment, earnings season has been largely in line with expectations and the consensus estimates for FY2024 Nifty earnings have not seen any material downgrades. In terms of demand outlook, the overall commentary by most companies is encouraging, excluding some export-oriented businesses or rural demand-driven businesses. 
&nbsp; 
Public sector banks' total profit crossed Rs 1 lakh crore mark in FY23. Your views on the same 
&nbsp; 
With the NPA cycle behind us and healthy credit growth supporting the core business, the quarterly results of PSU banks have seen a dramatic reversal in the past few quarters. Accordingly, the PSU bank stocks have also seen substantial re-ratings in the past 12–15 months. Hence, we believe it is time to be selective in the PSU bank space now. Especially since the net interest margins (NIMs) could come under pressure in FY2024. Besides, there is a regulatory overhang related to possible guidelines on expected credit loss (ECL) provisioning that could result in a spike in NPAs, leading to additional provisioning requirements and the possible raising of equity capital by some of the PSU banks. Over the next 12–18 months, we believe that financials (NBFCs) can outperform PSU banks. NBFCs would benefit from a reversal in interest rates and better growth in some of the segments like mortgage loans, consumer loans, and MSME loans. 
&nbsp; 
What's your view on the Indian IT sector? Is artificial intelligence going to be the game changer? Your top picks, if any 
&nbsp; 
Indian IT companies have bounced back from oversold conditions lately. We do not expect the uptrend to sustain in the next few quarters. That’s because of the uncertain demand environment against the backdrop of the expected recession in many developing economies. Also, the valuations are not cheap given the muted growth expectations for FY2024–25 and the pressure on margins. Specific to AI, we think it can be a threat and also an enabler for Indian IT services companies, depending on their ability to adapt and realign the business model. 
&nbsp; 
New-age companies such as Zomato, Nykaa, and Paytm fared better in Q4. Will you suggest long-term investors bet on these stocks now? 
&nbsp; 
Some of the new-age companies have bounced back smartly on the back of narrowing losses on their books (even ahead of guidance in some cases), along with positive sentimental rub-offs from the upsurge in Nasdaq and new-age companies in US markets. We do not cover any of the recently listed new-age companies. We prefer to play the upside through Infoedge, which has interests in various new-age businesses in India. 
&nbsp; 
Please suggest the sectors in which you are overweight and underweight. 
&nbsp; 
As an investor with an investment horizon of 18–24 months, we believe that private sector banks, NBFCs, auto and auto ancillary companies, engineering and capital goods companies, and select consumer and building material companies should outperform. On the other hand, we believe that energy, metals, and IT services could turn out to be laggards in the same period.

Stock Market Expert View: The market expert&nbsp;notes that IT services stocks have bounced back from oversold territory, but they are unlikely to sustain the uptrend in the next few quarters because of the uncertain demand environment


EXCLUSIVE | IT stocks' valuations not cheap, could turn out to be laggards in 18-24 months: Gaurav Dua, Sharekhan

Indiabulls Real Estate's stock took a heavy knock after NCLT, Chandigarh, withheld the merger plan of NAM Estates &amp; Embassy One into the company. The stock tumbled as much as 20 per cent to Rs 55.63 on the BSE, post the development.

Swati Verma