A time to give revised IIP a chance

The IIP growth of 6% for the month (5.9%) over October's 5% contraction was not such a puzzle, esp manufacturing growth in 6.6% and durables remaining 11% during the festival month despite good October inventories (probably) that did not show up in October's pessimistic numbers. Probably more than another revision IIP needs careful seasonal adjustments to match up to frequent monthly and year on year comparisons which have both lost meaning

The pick up in Cap Goods and transportation sub sector is apparently from Boeing orders , as in the US scenario. And that wild swing from -25.5% to +4.6% in Capital Goods/infrastructure alone is enough to whittle one's reality check if one uses IIP. Mining again volatile at just 4.4%, and the infosys results will make an apprearaance here as a special treat for those still tracking the IT sector wilfully,

October IIP was revised to -4.7%, non durables and Electricity growth in November highly satisfactory at 11.2% and 14.6%, basic goods from 0% to 6.3%, intermediate goods to flat from -6%

A time for Infosys, past

The cut of growth estimates to 16% and a last clarion call from Infosys( before going down) for high quality revenues led by consulting as CTS shines up on the horizon wihtth low cost high volumes and TCS maintains the domestic lead Esp suspect would be macro strategy pronouncmements in the wait and watch mode , having plateaued or lost relevance in managing high relevance for clients and or creating and non linear growth in products and platforms. Europe's outsourcing experience is patchy at best and they are busy at home this year, growth in Asia not spilling over to spread of outsourcing for another decade?

Infy wants growth from Europe (touche) and 5 large deals were signed in the quarter for $500 mln value, one in Europe. Margins are good for Infy and hedging for less than half the revenues at $877 mln. Sales were $1.8 bln , forecast for Q4 flat at the same $1.80 bln and expecting yoy growth to end at $7.05 bln revenues in March 2013

Also funnily, the management team just about managed to not sppeak about growth in banking and financial services but then the sector remains key, we believe also nearshoring is more key than you would believe in such a key Outsourcing insdustry thus Accenture outscoring Infy by 5:1 in coming bids and wins despite the "potential" for this industry,. Between CTS and Accenture's growth (outside India) Indian IT is up for recalibration or individually for Infy and HCL Tech

Q3 Sales INR 9298 Crs ( INR 92.98 bln) up 12% QOQ from 8090 CRs (INR 80.98 bln) 

Q3 Op Margins 4.4 % currency advantage 3% from rupee

Q3 OP Margin 31.4%, pricing up 5% yoy

Added 49 clients, 5 large deals, 2 above $500 bln, increasing share of outsourcing of clients with higher quality business key target ( biggst weakness in strategy)

Europe and Healthcare have grown revenues 13% in Europe from September 2011 and both Life sciences and healthcare in double digits

 

HDFC SHOCKER AT THE INVESTMENT POST

Future Outlook

Pricing stable

FY2012 growth down from 17-19% to 16.4%