External broker reports(aggregated public sources), HDFC Securities

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External broker reports(aggregated public sources)

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Thematic (Sector/Industry)

<ul><li>LTIMindtree: LTIMindtree (LTIM) reported largely in-line performance in Q1FY24</li><li>With flat sequential revenue performance in Q1, the ask rate is substantial (&gt;4% CQGR) for LTIM to achieve its ‘aspirational’ double-digit growth for FY24E</li><li>We believe that LTIM will continue to grow at a considerable growth premium to tier-1 IT and the company will take market share from tier-1 IT (5% of India tier-1 IT but ~9% share of incremental growth)</li></ul>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.

LTIMindtree: LTIMindtree (LTIM) reported largely in-line performance in Q1FY24With flat sequential revenue performance in Q1, the ask rate is substantial (&gt;4% CQGR) for LTIM to achieve its ‘aspirational’ double-digit growth for FY24EWe believe that LTIM will continue to grow at a considerable growth premium to tier-1 IT and the company will take market share from tier-1 IT (5% of India tier-1 IT but ~9% share of incremental growth)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 - LTIMindtree, Tata Elxsi, Karur Vysya Bank

<ul><li>We hosted the ISG index call (link) and the key message was recovery in the business environment ahead</li><li>While ISG maintained the CY23 outlook on growth in managed services deal bookings (+5% for CY23), recovery ahead is based on (1) improving pipeline for new scope projects (vs renewals &amp; extension heavy recently that drove vendor consolidation) (2) approval threshold for projects and transition timelines normalising with stable pricing environment (3) pipeline build-up for SIs with increased enterprise interest in captives and (4) stability to return in BFSI, which was impacted by executive movement earlier in enterprises</li><li>The current disconnect between the growth in bookings and soft revenue growth is largely due to the impact on discretionary services</li></ul>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.

We hosted the ISG index call (link) and the key message was recovery in the business environment aheadWhile ISG maintained the CY23 outlook on growth in managed services deal bookings (+5% for CY23), recovery ahead is based on (1) improving pipeline for new scope projects (vs renewals &amp; extension heavy recently that drove vendor consolidation) (2) approval threshold for projects and transition timelines normalising with stable pricing environment (3) pipeline build-up for SIs with increased enterprise interest in captives and (4) stability to return in BFSI, which was impacted by executive movement earlier in enterprisesThe current disconnect between the growth in bookings and soft revenue growth is largely due to the impact on discretionary servicesContent 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.

Equity Bottom-Up

<ul><li>We met the management of Tata Elxsi (TELX) to evaluate the demand environment</li><li>The key highlights include (1) strong momentum in the transportation vertical (2) expected recovery post-Q1 in the media &amp; communication and healthcare &amp; life sciences verticals (stronger recovery in the second half of FY24) and (3) operating band within 28-29% PBTM for FY24E notwithstanding investments in capacity expansion</li><li>We increase earnings estimates (~3% for FY25E), factoring in a recovery in revenue growth, but valuation remains expensive</li></ul>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.

We met the management of Tata Elxsi (TELX) to evaluate the demand environmentThe key highlights include (1) strong momentum in the transportation vertical (2) expected recovery post-Q1 in the media &amp; communication and healthcare &amp; life sciences verticals (stronger recovery in the second half of FY24) and (3) operating band within 28-29% PBTM for FY24E notwithstanding investments in capacity expansionWe increase earnings estimates (~3% for FY25E), factoring in a recovery in revenue growth, but valuation remains expensiveContent 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 Elxsi: Recovering but Valuation Remains Expensive.  Maintain SELL

<ul><li>IT sector growth has slipped on account of first-order and second-order implications of the prevalent macros</li><li>The macro challenges are manifesting into a set of outcomes for the sector ranging from cuts in discretionary spending, delay in decision making (slower conversion from pipeline to TCV), slower deal ramp-up, to change in the propensity for price increases/volume discounts</li><li>While the resilience/opportunity in the sector is the medium-term recoil (high-single digit CC growth in FY25E following mid-single digit in FY24E), in this note we focus on the ‘near-term demand’ markers and assess the growth dispersion despite the aggregate slowdown</li></ul>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.

IT sector growth has slipped on account of first-order and second-order implications of the prevalent macrosThe macro challenges are manifesting into a set of outcomes for the sector ranging from cuts in discretionary spending, delay in decision making (slower conversion from pipeline to TCV), slower deal ramp-up, to change in the propensity for price increases/volume discountsWhile the resilience/opportunity in the sector is the medium-term recoil (high-single digit CC growth in FY25E following mid-single digit in FY24E), in this note we focus on the ‘near-term demand’ markers and assess the growth dispersion despite the aggregate slowdownContent 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.

India

Zensar Technologies Ltd. develops software and it also provides IT consulting and related services. The Company has expertise in key verticals of retail, manufacturing, logistics, financial services, telecom and utilities. Zensar offers end-to-end solutions across diverse technology platforms &industry domains through a Global Delivery Model, which delivers 24 X 7 services.

Cyient Limited provides engineering services, data analytics, and data, networks and operations solutions. The Company offers its services to the aerospace and defense, energy, heavy machinery, consumer, medical utility, communications, semiconductor, and transportation industries around the world.

Intellect Design Arena Ltd is a financial technology firm. The Company caters to banks, insurance companies and other financial service firms.

Tanla Platforms Limited develops and markets computer software.  The Company develops software for wireless communications.

Newgen Software Technologies Limited provides IT services. The Company offers software development, document management system, workflow and process automation, business process, enterprise content, and customer communication management services. Newgen Software Technologies serves customers worldwide.

AurionPro Solutions Limited provides software solutions and offshore information technology outsourcing services to banking, financial services, and technology companies.

Nucleus Software Exports Limited specializes in the development and production of software systems, in addition to the supply of various support and technical advisory services. The majority of the Group's products and services are centered towards the banking and financial services sectors.

Sasken Communication Technologies Ltd. is an embedded telecom solutions company that helps businesses across the telecom value chain accelerate product development life cycles. The Company works with terminal device manufacturers, network equipment manufacturers, semiconductor vendors and network operators on new product development and manufacturing.

ASM Technologies Ltd. offers computer software services.  The Company offers consulting, information technology and software testing services; develops enterprise, Internet and embedded systems applications; and offers networking and telecommunications services.

Subex Limited develops software products and provides software consulting services. The Company's products primarily focus on providing software solutions for clients in the telecommunications sector.

Kingsoft Corporation Ltd. develops and markets computer software.  The Company develops role-playing computer games and security, word processing, and spreadsheet software.

Technology One Limited is an Australian-based company that is engaged in the development, marketing, sales, implementation, support, and distribution of financial management and enterprise software solutions. The Company has operations in New Zealand, the United Kingdom, the South Pacific, and Malaysia.

Hundsun Technologies Inc develops application software for security firms, commercial banks, fund management firms, and other industries.  The Company also sells computer hardware and provides system integration services.

International Games System Co., Ltd. plans, designs, develops, manufactures, and markets software and hardware for arcade games, PC games, and Internet on-line games.

Varonis Systems, Inc. designs and develops data security software solutions. The Company offers data management systems to organize, manage, and protect unstructured and semi-structured data such as documents, spreadsheets, presentations, media files, and other business data. Varonis Systems operates worldwide.

Blackbaud, Inc. provides software and related services designed specifically for non-profit organizations. The Company's products and services enable non-profit organizations to increase donations, reduce fundraising costs, improve communication with constituents, manage their finances, and optimize internal operations.

Qualys, Inc. provides information technology security risk and compliance management solutions. The Company offers products for vulnerability management, policy compliance, web application scanning, malware detection, and associated security products. Qualys conducts business in the United States.

CommVault Systems, Inc. provides data management software applications and related services. The Company develops, markets, and sells a suite of data management software applications designed to protect and manage data throughout its lifecycle.

Trend Micro Incorporated develops and markets anti-virus computer software and internet security software.  The Company also sells its products in the United States, Europe, and Asia.

ACI Worldwide, Inc. develops, markets, and supports software products for the global electronics funds transfer market.  The Company's products are used to process transactions involving credit cards, debit cards, smartcards, home banking services, checks, and automated clearing and settlement.

Tata Elxsi Limited manufactures computers and workstations besides providing system design, software development and integration services. The Group supplies its products to a number of industries, including the automotive, metals, consumer products, finance, IT & Communications, energy, chemicals, engineering, pharmaceuticals, entertainment and agro industries.

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Tata Elxsi Ltd (TELX IN)

HSIE Results Daily - LTIMindtree, Tata Elxsi, Karur Vysya Bank

With flat sequential revenue performance in Q1, the ask rate is substantial (>4% CQGR) for LTIM to achieve its ‘aspirational’ double-digit growth...

HDFC Securities

IT Sector Update: Recovery ahead

The current disconnect between the growth in bookings and soft revenue growth is largely due to the impact on discretionary service

HDFC Securities

IT Sector Update - Recovery Ahead

The current disconnect between the growth in bookings and soft revenue growth is largely due to the impact on discretionary services

HDFC Securities

Tata Elxsi: Recovering but Valuation Remains Expensive. Maintain SELL

We increase earnings estimates (~3% for FY25E), factoring in a recovery in revenue growth, but valuation remains expensive

HDFC Securities

IT sector: Mixed signals; stay selective

The macro challenges are manifesting into a set of outcomes for the sector ranging from cuts in discretionary spending, delay in decision making

HDFC Securities

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