Watch the interview of P Phani Sekhar of Angel Broking with Latha Venkatesh & Sonia Shenoy on CNBC-TV18, in which he shared his reading and outlook on market and some ideas for 2015.
Below is the verbatim transcript of Phani Sekhar's interview with CNBC-TV18:
Infosys
Infosys is more of an export theme capitalising on very robust cues that you are getting out of US because that still continues to be very large market for Infosys. If you have looked at Accenture’s revision in guidance this weekend, it was very clear that discretionary IT spend is coming back in a big way in US and more importantly the new found SMAC that is social, mobility, analytics and cloud is also replacing the traditional applications, which is giving rise to a potentially USD 200 billion market that is up for rebid over the next two-three years and that is where Infosys’ new found aggression, which has come because of change in leadership is going to help.
We are already getting channel checks that they are pretty active in the market. While margins might be difficult to defend considering that they have crossed 28 percent last quarter but margins will still be respectable but what will be interesting to watch out for Infosys is the sales growth, which will be better than what you saw in the last two years.
Valuations are very attractive at around 15 times and very importantly 2014 in US saw companies such as Intel and Microsoft, which are technology leaders out there perform very well and the outlook still looks robust for them. So, I see no reason why Indian IT companies especially those like Infosys which is still trading at a valuation discount for the larger ones like TCS should not do well. So I am looking at atleast a 20-25 percent upside for 2015 for Infosys.
UltraTech Cement
Today’s deal more or less has been baked in. If you look at not just UltraTech but an entire largecap cement basket, street is factoring in two things, one is that volume growth will be loser to 10-12 percent over the next three years and price realisation growth will also be 10-12 percent, so all that is already baked in to the valuations as we speak today. So I don’t see any meaningful impact on UltraTech extending beyond today’s trading session. Simply because the incremental addition to UltraTech’s capacity that is if you look at proposed in 2015 because of today’ deal is not significant and although it has bought it at a slightly elevated valuation but in the larger scheme of things for a giant like UltraTech it will not amount too much. So the real swing will come as and when the volume growth uptick starts or the price realisation increases, which in turn is again a direct function of volume growth. So it is slightly longer-term story, so we are advising investors to buy on decline.
Hero Motocorp
Hero Motocorp has done well over the last one year. TVS had a strong presence but Hero has gained market share there and that is quit interesting. In the mid executive segment, in the bikes it has retained and slightly grown its lead over Bajaj Auto and it has gained a lot of this market share in the motorcycle segment at the expense of Bajaj notwithstanding the competition from Honda.
All in all even in a tough market it has been showing respectable growth in volumes due to diversified product mix and export although very small in comparison to its overall sales are also expected to grow at a very high pace albeit on a lower base although valuations are on the higher side at around 16 times but since one is expecting a bottomline growth of 20-22 percent over the next two years that is CAGR, these valuations can be justified and they can grow especially when Bajaj Auto continues to struggle over the next one year or so. So this is one story that investors should bet on.
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