Update on the Indian Equity Market:<\/p>\n
On Friday, NIFTY ended up 170 pts down (-2.06%) at below 8,100 level as ratings downgrade for the banking sector, due to the impact of the crisis and ensuing stressed asset concerns, impacted the financial stocks.<\/p>\n
Among the sectoral indices, PHARMA (4.8%), and FMCG (0.7%) were the only gainers while PVT BANK (-5.5%), BANK (-5.3%) and FIN SERVICE (-4.3%) were the top losers. SUNPHARMA (+9.6%), CIPLA (+8.3%) and ITC (+6.7%) were the top gainers. AXISBANK (-8.9%), INDUSINDBANK (-8.3%) and ICICIBANK (-7.4%) were the top losers.<\/p>\n
IT industry adopting new methods to tackle the crisis: C P Gurnani<\/p>\n
Chief Executive Officer (CEO) and Managing Director (MD) of Tech Mahindra<\/p>\n
India has spent only 0.3 per cent (of the GDP) and the World Bank has suggested the countries to spend up to 6-7 per cent said Mr Gurnani.<\/p>\n
The world is heading towards a \u2018new normal\u2019 due to the current crisis, by almost forcing businesses to work from home, the IT industry has learnt a lot from this event.<\/p>\n
Edited excerpts of an interview C P Gurnani, Chief Executive Officer (CEO) and Managing Director (MD) of Tech Mahindra; dated 31st March 2020:<\/p>\n
His views on the current crisis and its impact on IT industry \u2013 He is of the opinion that India has been very lucky. Even today, only ~ 1,100 cases though it\u2019s true that India\u2019s testing infrastructure is not as strong as the US. Everyone is also praying that with rising temperature, the propagation of the virus will be reduced. So, he is not expecting further lockdown but probably a new normal will be kicked in. The new normal is, people will keep safe distance and they will be a lot more hygienic than ever before.<\/p>\n
When asked what the industry as a whole has learnt, he divided this into three chapters. The first one is the period \u2018before the crisis\u2019, second is \u2018during the crisis\u2019 and third is \u2018after the crisis\u2019. He said that everyone knew that they have to become healthy, but had been ignoring it. Everyone knew that they have to reduce pollution. During the pandemic, many things have become reality. It was an opportunity for Tech Mahindra and others to take those decisions, which were never taken before. Tech M have now introduced many collaborative tools and launched workstation as a service, remote diagnostics networks, content delivery platforms and omni-channel retail experiences and so on. Many of these platforms were ready but were not launched yet, but now it is becoming a reality.<\/p>\n
When asked about the challenges in the \u2018post crisis\u2019 environment he stated that the reality is the government agencies have now officially declared recession. India has spent only 0.3 per cent (of the GDP) and the World Bank has suggested the countries to spend up to 6-7 per cent. He thinks there is headroom to kick-start the economy. Consumers\u2019 confidence comes back very fast. Infrastructure spending will increase the cash flow. Though the B2B businesses will take little longer (to come back to shape), he thinks the doomsayers are being very negative. It is less than a year cycle of recovery.<\/p>\n
His comments on hospitality, travel and aviation sector: Hospitality sector is not a big one for Tech M as it contributes less than 3 per cent of the total revenue. Travel and hospitality have also seen these challenges in the past. Besides, this sector has always been the first one to get impacted. But the sector also bounces back.<\/p>\n
When asked about the benefit to Tech M from the Telecom Vertical as the company has a good exposure to this sector, he said that he is not denying it but everyone is in crisis. Keeping the human capital intact and lights on are important themes.<\/p>\n
He was asked about the sales team performance, whether they are still chasing for deals on ground or stopped. He replied that everyone is talking to everybody. No conversation has stopped. In fact, the number has increased. However, we need to remember that the sales team are not talking to organizations, but only to individuals. Clients are not having their board meetings or committee meeting now. Everyone is on a fire-fighting mode. Overall, he is proud of the associates for the way they have rallied. Offices in the Philippines and India are not working, but none of Tech M\u2019s customers has been impacted.<\/p>\n
He also added that almost 90 per cent or their employees are working from home. The remaining go to office because of the data security norms. So, the density is less than 6 per cent in the offices. Work from home has actually helped in enhancing the overall productivity. They are using various tools to measure the productivity.<\/p>\n
His views on laying off staff to withstand the business losses in IT industry: Each company has its own strategy. What Tech M have conveyed to their people is that the company would rather offer advances to their employees who earn less than \u20b9 35,000 per month. They will offer this to temporary or even sub-contract workers, as Tech M understands they require their support a lot more.<\/p>\n
With regards to buy back, he said that looking at the current scenario he feels it will be unfair at this point to take advantage and he won\u2019t recommend it to the board.<\/p>\n
Consensus Estimate: (Source: market screener, investing.com websites)<\/p>\n
The closing price of Tech M was \u20b9 524\/- as of 3-April-20. It traded at 10.4x\/ 9.6x\/ 8.6x the consensus EPS estimate of \u20b9 49\/ 53\/ 59 for FY20E\/ FY21E\/ FY22E respectively.<\/p>\n
Consensus target price of \u20b9 793\/- implies a PE multiple of 13.4x on FY22E EPS of \u20b9 59\/-<\/p>\n","protected":false},"excerpt":{"rendered":"
Update on the Indian Equity Market: On Friday, NIFTY ended up 170 pts down (-2.06%) at below 8,100 level as ratings downgrade for the banking sector, due to the impact of the crisis and ensuing stressed asset concerns, impacted the financial stocks. Among the sectoral indices, PHARMA (4.8%), and FMCG (0.7%) were the only gainers […]<\/p>\n","protected":false},"author":5,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[87],"tags":[370,266,369],"_links":{"self":[{"href":"http:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts\/900"}],"collection":[{"href":"http:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"http:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/comments?post=900"}],"version-history":[{"count":2,"href":"http:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts\/900\/revisions"}],"predecessor-version":[{"id":905,"href":"http:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts\/900\/revisions\/905"}],"wp:attachment":[{"href":"http:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/media?parent=900"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/categories?post=900"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/tags?post=900"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}