In today’s briefing:
- MSCI Taiwan May QCIR: Potential Inclusions to Drive Deletions
- Tata Technologies Pre-IPO – The Negatives – Still Has a Few Issues
- Temenos (TEMN SW; TMSNY US): M&A Looks Imminent
- Quiddity Leaderboard NIFTY Sep 23: LTIMINDTREE Could Be an Intra-Review NIFTY 50 ADD
- TCS: Q4FY23 Growth and Margins Weaker than Expected
- Infosys: Weak Q4FY23 Earnings
- [JD.com (JD US, SELL, TP US$27) Earnings Preview]: Slow-Growth and Competitive Pressure Remain
- More Milestones Reached on the Path of the Company’s Evolution
MSCI Taiwan May QCIR: Potential Inclusions to Drive Deletions
- Based on closing prices from 12 April, we forecast 2 adds and 2 deletes for the MSCI Taiwan Index at the May QCIR.
- Global Unichip (3443 TT) is a high probability index inclusion and that will drive the deletion of Giant Manufacturing (9921 TT) from the index.
- Wistron Corp (3231 TT) is a potential inclusion and that could result in the deletion of Win Semiconductors (3105 TT) from the index.
Tata Technologies Pre-IPO – The Negatives – Still Has a Few Issues
- Tata Technologies (TATATECH IN) (TT) is looking to raise around US$600m in its upcoming India IPO.
- Tata Technologies is a global engineering services company offering product development and digital solutions, including turnkey solutions, to global original equipment manufacturers (OEMs) and their tier 1 suppliers.
- In this note we talk about the not-so-positive aspects of the deal.
Temenos (TEMN SW; TMSNY US): M&A Looks Imminent
- Temenos is an attractive takeover candidate with multiple M&A speculation in the media in the last 12-18 months.
- The probability of Temenos being taken over continues to increase especially after the fresh round of banking industry turmoil witnessed in the last few weeks.
- At a buy-out multiple of 10x EV/sales, Temenos would be worth CHF110 per share which is roughly 72% upside from here.
Quiddity Leaderboard NIFTY Sep 23: LTIMINDTREE Could Be an Intra-Review NIFTY 50 ADD
- In this insight, we take a look at the names leading the race to become ADDs/DELs for the NIFTY 50 and NIFTY 100 indices in the September 2023 rebalance.
- A couple of these names could become intra-review additions if the HDFC Limited (HDFC IN) – HDFC Bank (HDFCB IN) Merger closes prior to the September 2023 Rebalance.
- Apart from that, there could be five ADDs/DELs for the NIFTY 100 index which by definition will also be added/deleted from the NIFTY Next 50 index.
TCS: Q4FY23 Growth and Margins Weaker than Expected
- TCS reported weaker than expected growth and margins. YoY growth in constant currency (CC) terms came in at just 10.7%. Operating Margin (OPM) came in at 24.1% vs 25% expected.
- North America in particular has seen some demand slowdown, largely due to deferment of discretionary projects and delayed decision making. Europe is improving as energy crisis is receding.
- Looking forward, Europe, in particular UK, is likely to lead the growth. North America may also come back as the banking crisis there seems to have been contained.
Infosys: Weak Q4FY23 Earnings
- Infosys reported a weak Q4FY23 with QoQ CC (Constant Currency) growth down by -3.2%. OPM (Operating Margin) contracted QoQ by -50bp to 21%, and was weaker than 21.5%+ expected.
- Led by macro concerns, demand outlook remains cautious with FY24 growth guided to be 4-7% YoY in CC terms.
- The bottom end of the FY24 OPM guidance has been lowered to 20% vs 21% achieved in FY23. Overall OPM guidance for FY24 is 20-22%.
[JD.com (JD US, SELL, TP US$27) Earnings Preview]: Slow-Growth and Competitive Pressure Remain
- We expect JD to report C1Q23 top-line and non-IFRS net income (1.7%) and (12%) vs. consensus, respectively.
- We expect revenue to decline (1%) YoY in 1Q23 and grow just 3% YoY in FY23, due to (1) slow recovery in key product categories like electronics; (2) team restructuring;
- And (3) competitive landscape. We maintain SELL and US$27 TP. Our TP implies 10x 2024 P/E.
More Milestones Reached on the Path of the Company’s Evolution
- Project Dorothy interconnection now complete and ready for energization.
- Soluna announced that it has completed the final interconnection construction, setting up for the energization of the first 25 MW phase of the project, which will soon be followed by the 25 MW phase (Dorothy 1B).
- The final energization requests have been submitted to ERCOT (the grid operator) and we expect the project to be energized in the coming weeks.
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