20181008-Maybank_KERPL-India_IT_Sector2QSeasonality_+_Currency_8页_600kb

报告摘要

India IT Sector Summary

Core Content

The document provides a comprehensive analysis of the performance and outlook for the Indian IT sector, focusing on the second quarter of fiscal year 2019 (2QFY19). It highlights the impact of seasonal demand, currency fluctuations, and company-specific factors on revenue, EBIT, and EPS growth. The report also includes a detailed table of key metrics for various IT stocks and discusses the valuation of the NIFTY IT Index.

Main Points

Forecasted Performance

Revenue Growth: Forecasted USD revenue increases of 3.2% to 5.5% QoQ due to INR weakness and seasonal demand.
EBIT Growth: EBIT is expected to increase by 8.2% to 25.8% QoQ, driven by INR depreciation and cost efficiencies.
EPS Growth: EPS is projected to rise by 3.5% to 47% QoQ, due to higher EBIT and translation gains.

Sector Outlook

The NIFTY IT Index has outperformed the NIFTY by 34% YTD, trading at a 17.5x 1-year forward P/E, which is a 14% premium to the NIFTY.
The sector is expected to continue outperforming, supported by improving demand and ongoing INR weakness.
Risks: A global economic slowdown could reduce IT spending and affect the sector's growth.

Company-Specific Insights

TCS is expected to lead revenue growth among large caps, with the strongest EBIT margin improvement.
TAKE Solutions is the top performer among mid- and small caps, with a 76% upside in target price.
PSYS is expected to have the weakest performance, with a 4.3% QoQ revenue increase and margin contraction.
HCLT, TECHM, and TAKE are highlighted as top picks due to their strong growth potential and positive ratings.

Currency Impact

INR depreciation of 4.1% QoQ is expected to boost revenue in INR terms and improve EBIT margins.
The USD/INR rate is forecasted to be 70.3 for 2QFY19, with a 5.9% QoQ depreciation.

Key Information

Revenue Growth by Company

TCS: USD revenue +3.2%, INR revenue +7.0%
INFO: USD revenue +2.1%, INR revenue +6.2%
HCLT: USD revenue +1.9%, INR revenue +6.1%
WPRO: USD revenue +0.3%, INR revenue +4.0%
TECHM: USD revenue +0.9%, INR revenue +4.7%
MPHL: USD revenue +3.8%, INR revenue +5.7%
HEXW: USD revenue +3.8%, INR revenue +8.6%
CYL: USD revenue +3.4%, INR revenue +8.4%
PSYS: USD revenue +0.2%, INR revenue +4.3%
TAKE: USD revenue +5.5%, INR revenue +10.6%

EBIT and Net Profit Growth

CYL is expected to report the highest EBIT margin increase of 25.8%.
TAKE shows the highest net profit growth of 47% QoQ.
PSYS experiences a margin contraction of 40bps.

Valuation and Investment Metrics

The NIFTY IT Index trades at 17.5x 1-year forward P/E, which is 14% higher than the NIFTY.
The 5-year average P/E is 16.6x, indicating a premium.
Top Picks: HCLT, TECHM, and TAKE are recommended with a BUY rating.

Summary Table

Stock	Revenue Growth (QoQ)	EBIT Growth (QoQ)	Net Profit Growth (QoQ)	Rating	Upside (%)
Tata Consultancy Serv.	7.0%	13.5%	8.5%	HOLD	0%
Infosys	6.2%	8.2%	4.8%	HOLD	4%
HCL Tech.	6.1%	9.6%	4.5%	BUY	14%
Wipro	4.0%	11.2%	17.6%	HOLD	-3%
Tech Mahindra	4.7%	13.1%	13.7%	BUY	20%
Mphasis	5.7%	9.3%	3.5%	HOLD	10%
Hexaware Tech.	8.6%	17.6%	10.0%	BUY	15%
Cyient	8.4%	25.8%	47.0%	BUY	11%
Persistent Systems	4.3%	1.1%	5.6%	BUY	33%
TAKE Solutions	10.6%	15.5%	11.0%	BUY	76%

Conclusion

The Indian IT sector is anticipated to show strong performance in 2QFY19, driven by seasonal demand and INR weakness. The report highlights that TCS and TAKE are leading in their respective categories, with CYL and TAKE showing the highest EPS growth. While the sector is currently overvalued compared to its 5-year average, the positive outlook remains, with risks primarily stemming from global economic conditions. Investors are advised to consider the specific company fundamentals and market dynamics when making investment decisions.

展开完整摘要