Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

<div><p>The <a href="https://www.smartkarma.com/entities/s-p-bse-sensex-index" target="_blank" data-smartkarma-citation="entities:31494:1" rel="noopener">S&amp;P BSE SENSEX Index (SENSEX INDEX)</a> is the flagship index of the Bombay Stock Exchange (BSE). The index has 30 stocks and is a free float weighted market cap index. The next rebalance will be effective after the close of trading on 17 December.</p></div><div>
<p>The December review uses the market cap and turnover data from 1 May to 31 October to determine the stocks to be included and excluded from the index, and the announcement of the changes is done 4 weeks before the rebalance effective date.</p>
<p>With 6 days to go in the review period, we see <a href="https://www.smartkarma.com/entities/wipro-ltd" target="_blank" data-smartkarma-citation="entities:15360:1" rel="noopener">Wipro Ltd (WPRO IN)</a> as a high probability index addition. <a href="https://www.smartkarma.com/entities/bajaj-auto-ltd" target="_blank" data-smartkarma-citation="entities:3613:1" rel="noopener">Bajaj Auto Ltd (BJAUT IN)</a> is the lowest ranked index constituent and is a likely deletion from the index.</p>
<p>There is a (slim) possibility of <a href="https://www.smartkarma.com/entities/nestle-india-ltd" target="_blank" data-smartkarma-citation="entities:13101:1" rel="noopener">Nestle India (NEST IN)</a> being deleted from the index if it fails the annualised traded value test. As it stands, it is touch and go for the stock.</p>
<p>Passive trackers will need to buy over 2 days of ADV on <a href="https://www.smartkarma.com/entities/wipro-ltd" target="_blank" data-smartkarma-citation="entities:15360:1" rel="noopener">Wipro Ltd (WPRO IN)</a> and sell over 3.5 days of ADV on <a href="https://www.smartkarma.com/entities/bajaj-auto-ltd" target="_blank" data-smartkarma-citation="entities:3613:1" rel="noopener">Bajaj Auto Ltd (BJAUT IN)</a>. If <a href="https://www.smartkarma.com/entities/nestle-india-ltd" target="_blank" data-smartkarma-citation="entities:13101:1" rel="noopener">Nestle India (NEST IN)</a> is deleted instead, passive trackers will need to sell 7 days of ADV on the stock.</p>
<p>In terms of delivery volumes, the impact is much larger with passive trackers needing to buy 8.5 days on <a href="https://www.smartkarma.com/entities/wipro-ltd" target="_blank" data-smartkarma-citation="entities:15360:1" rel="noopener">Wipro Ltd (WPRO IN)</a>, while selling either 8.8 days on <a href="https://www.smartkarma.com/entities/bajaj-auto-ltd" target="_blank" data-smartkarma-citation="entities:3613:1" rel="noopener">Bajaj Auto Ltd (BJAUT IN)</a> or 13 days on <a href="https://www.smartkarma.com/entities/nestle-india-ltd" target="_blank" data-smartkarma-citation="entities:13101:1" rel="noopener">Nestle India (NEST IN)</a>.</p>
</div>

The S&amp;P BSE SENSEX Index (SENSEX INDEX) is the flagship index of the Bombay Stock Exchange (BSE). The index has 30 stocks and is a free float weighted market cap index. The next rebalance will be effective after the close of trading on 17 December.
The December review uses the market cap and turnover data from 1 May to 31 October to determine the stocks to be included and excluded from the index, and the announcement of the changes is done 4 weeks before the rebalance effective date.
With 6 days to go in the review period, we see Wipro Ltd (WPRO IN) as a high probability index addition. Bajaj Auto Ltd (BJAUT IN) is the lowest ranked index constituent and is a likely deletion from the index.
There is a (slim) possibility of Nestle India (NEST IN) being deleted from the index if it fails the annualised traded value test. As it stands, it is touch and go for the stock.
Passive trackers will need to buy over 2 days of ADV on Wipro Ltd (WPRO IN) and sell over 3.5 days of ADV on Bajaj Auto Ltd (BJAUT IN). If Nestle India (NEST IN) is deleted instead, passive trackers will need to sell 7 days of ADV on the stock.
In terms of delivery volumes, the impact is much larger with passive trackers needing to buy 8.5 days on Wipro Ltd (WPRO IN), while selling either 8.8 days on Bajaj Auto Ltd (BJAUT IN) or 13 days on Nestle India (NEST IN).


Sensex Dec 2021 Index Rebalance Preview: Wipro Should Be Added, Deletion Has An Interesting Option

External broker reports(aggregated public sources), ICICI Securities Ltd

ICICI Securities Limited

External broker reports(aggregated public sources)

Equity Bottom-Up

<p>The company's deal pipeline continues to be healthy at US$7.6 billion.</p><p>Target Price and Valuation: We value TCS at Rs 4,530 i.e. 34x P/E on FY23E EPS...</p><div class="content-highlight"><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></div>

The company's deal pipeline continues to be healthy at US$7.6 billion.Target Price and Valuation: We value TCS at Rs 4,530 i.e. 34x P/E on FY23E EPS...Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Tata Consultancy Services: Margin Expansion QoQ a Positive Surprise

External broker reports(aggregated public sources), Axis Direct

Axis Direct

<p>We recommend a HOLD rating on the stock and assign a 30x P/E multiple to its FY24E earnings of Rs 135.2/share to arrive at a TP of Rs 4,110/share, implying an upside of 4% from CMP.</p><div class="content-highlight"><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></div>

We recommend a HOLD rating on the stock and assign a 30x P/E multiple to its FY24E earnings of Rs 135.2/share to arrive at a TP of Rs 4,110/share, implying an upside of 4% from CMP.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Tata Consultancy Services: Outlook Continues to Be Positive, Backed By Execution Prowess

External broker reports(aggregated public sources), Motilal Oswal Financial Services Limited

Motilal Oswal

<p>In line CC growth, but miss on USD revenue and margin: TCS reported an in line revenue growth of 4% QoQ CC in 2QFY22. However, USD revenue growth (2.9% QoQ) missed our estimate of 3.7% QoQ growth. EBIT margin expanded by 10bp QoQ to 25.6%, but was lower than our estimate of 26.2%, on supply side challenges. PAT stood at INR97b, up 6.9% QoQ, aided by higher other income and stable ETR. The company reported an OCF/PAT of 103% and a FCF/PAT of 97% on good working capital management, indicating the ability to generate strong cash flow.</p><div class="content-highlight"><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></div>

In line CC growth, but miss on USD revenue and margin: TCS reported an in line revenue growth of 4% QoQ CC in 2QFY22. However, USD revenue growth (2.9% QoQ) missed our estimate of 3.7% QoQ growth. EBIT margin expanded by 10bp QoQ to 25.6%, but was lower than our estimate of 26.2%, on supply side challenges. PAT stood at INR97b, up 6.9% QoQ, aided by higher other income and stable ETR. The company reported an OCF/PAT of 103% and a FCF/PAT of 97% on good working capital management, indicating the ability to generate strong cash flow.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Growth optimism intact, but near term hiccups limit upside

External broker reports(aggregated public sources), HDFC Securities

HDFC Securities

<p>Our target price of INR 4,180 is based on 32x Dec-23E EPS with EPS CAGR of 14% over FY21-24E. Tata Consultancy Services: We maintain ADD on TCS despite a slight miss on revenue and margin, supported by healthy deal wins (book-to-bill of 1.2x was similar to Accenture outsourcing). TCS continues to witness strength in its core business segment and has bagged higher mid-sized deals spread across verticals. We expect the growth to continue, supported by (1) strong demand environment, led by a secular shift to cloud, (2) growth pick-up in Europe, led by BFSI, (3) continued strong deal wins in retail &amp; CPG vertical and recovery in manufacturing, and (4) +25% YoY (excluding mega-deal) growth in TCV, led by TCS Cognix.</p><div class="content-highlight"><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></div>

Our target price of INR 4,180 is based on 32x Dec-23E EPS with EPS CAGR of 14% over FY21-24E. Tata Consultancy Services: We maintain ADD on TCS despite a slight miss on revenue and margin, supported by healthy deal wins (book-to-bill of 1.2x was similar to Accenture outsourcing). TCS continues to witness strength in its core business segment and has bagged higher mid-sized deals spread across verticals. We expect the growth to continue, supported by (1) strong demand environment, led by a secular shift to cloud, (2) growth pick-up in Europe, led by BFSI, (3) continued strong deal wins in retail &amp; CPG vertical and recovery in manufacturing, and (4) +25% YoY (excluding mega-deal) growth in TCV, led by TCS Cognix.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

HSIE Results Daily: Tata Consultancy Services

India

Tata Consultancy Services, a division of Tata Sons Limited, is a global IT services organization that provides a comprehensive range of IT services to its clients in diverse industries. The Company, caters to finance and banking, insurance, telecommunication, transportation, retail, manufacturing, pharmaceutical, and utility industries.

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Tata Consultancy Svcs (TCS IN)

Sensex Dec 2021 Index Rebalance Preview: Wipro Should Be Added, Deletion Has An Interesting Option

Near the end of the review period, we see Wipro as a high probability add. Bajaj Auto could be deleted as the lowest ranked constituent, but Nestle...

Brian Freitas

Tata Consultancy Services: Margin Expansion QoQ a Positive Surprise

The company's deal pipeline continues to be healthy at US$7.6 billion. We value TCS at Rs 4,530 i.e. 34x P/E on FY23E EPS...

ICICI Securities Limited

Tata Consultancy Services: Outlook Continues to Be Positive, Backed By Execution Prowess

We recommend a HOLD rating on the stock and assign a 30x P/E multiple to its FY24E earnings of Rs 135.2/share to arrive at a TP of Rs 4,110/share,...

Axis Direct

Growth optimism intact, but near term hiccups limit upside

In line CC growth, but miss on USD revenue and margin: TCS reported an in line revenue growth of 4% QoQ CC in 2QFY22. However, USD revenue growth...

Motilal Oswal

HSIE Results Daily: Tata Consultancy Services

Our target price of INR 4,180 is based on 32x Dec-23E EPS with EPS CAGR of 14% over FY21-24E. Tata Consultancy Services: We maintain ADD on TCS...

HDFC Securities

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