18 January 2013

SBI Emerging Business - HOLD :: Business Line


Birla Dividend Yield Plus: Invest :: Business Line


Selecting stocks on the basis of high dividend yield has not proved to be winning strategy in the recent stock market rally. If you rank diversified equity funds by their one-year returns, most dividend yield funds are bunched up in the middle of the charts.
Birla Dividend Yield Plus Fund, the fund with the best five-year record in this category, has turned in a muted performance in this genre. Its one-year return of 30 per cent lags the 43 per cent gain in Principal Dividend Yield Fund and the 36 per cent gain by BNP Paribas Dividend Yield Fund.
Yet, investors should consider buying Birla Dividend Yield Plus for their core portfolio.

NIIT Technologies Deal ramp‐up to give upside, Reiterate ‘BUY’ :Prabhudas Lilladher,


NIIT Technologies (NIIT Tech) reported revenues/margin above PLe/Consensus
expectation. However, on the margin front, it disappointed due to the weakness in
GIS and insurance business. Improving revenue momentum in GIS, project ramp-up
in Morris would give the much needed revenue impetus along with margin
expansion in CY13. We retain our ‘BUY’ rating with target price of Rs350.
! Revenue growth steady, margin disappoints: NIIT Tech reported revenue
growth of 2.9% QoQ to Rs5,144m (PLe: Rs5,126m, Cons: Rs5,035m) and 4.4% on
constant currency basis. EBITDA margin contracted by 115bps to 15.8% (PLe:
16.5%, Cons: 16.1%), mainly due to softness in GIS, Insurance business and
Transition costs associated with a large engagement. However, on account of
increase in other income (revaluation of foreign currency assets & liabilities),
PAT improved by 30% QoQ to Rs560m (PLe: Rs 592m, Cons: Rs545m).
! Recovery in GIS business and revenue, post transition, to give upside: The cost
associated with large project from Morris-related transition has impacted
margin by 40bps in the quarter. We expect revenue ramp-up in Q4FY13. GIS
business delivered operating margin of -7% compared to traditionally ~20%+
due to cost over-run in a APDRP contract. The management expects margin to
be recouped by Q1FY14, as Q4 is seasonally a strong quarter for GIS.
! Conference call highlights: 1) Margins declined significantly in GIS business in
Q3FY13~(7)% (Q2FY13~1%, Q1FY13~15%) 2) Q3FY13 Revenue – Room: Rs337m,
Morris: Rs303m, Projecta: Rs144m, GIS: Rs197m, CCTNS: Rs266m 3) Hedges:
US$47.9m (@Rs56.71) 4) Sabre BPO revenue: ~Rs52m (margin: ~8-9%) 5) BFS
vertical will continue to remain soft 6) Non-linear revenue: 21% 7) DSO: 76days
8) FCF for Q3FY13: ~Rs550m 9) Volume: US: 1%, Europe: 5.7% QoQ 10) Added
four new clients, CCTNS pilot phase went live in the last week of December
! Valuation & Recommendation: NIIT Tech has made investments in the business
and now is the time to reap. Positive IATA commentary, project ramp-up in GIS,
and Morris ramp-up would give revenue growth with margin impetus. NIIT Tech
is currently trading at 7.2x FY13 estimates with EPS CAGR of 13% (FY12-14E).

Deisel hike impact:: SGX Nifty 6,071.50 +17.50; markets to open UP

SGX Nifty 6,071.50 +17.50 (Singapore exchange)
Markets to open UP
8:15 AM India time
Jan 18