- #India's December WPI inflation rate hits 9-month high
- #What worked for India's #IT pack this quarter?
Find out what's happening in trade so far with Hersh Sayta 'Market IQ'. #NDTVProfitLive
Guest List:
Venkatraman Srinivasan, Executive Chairman, eMudhra
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- #What worked for India's #IT pack this quarter?
Find out what's happening in trade so far with Hersh Sayta 'Market IQ'. #NDTVProfitLive
Guest List:
Venkatraman Srinivasan, Executive Chairman, eMudhra
_______________________________________________________
For more videos subscribe to our channel: https://www.youtube.com/@NDTVProfitIndia
Visit NDTV Profit for more news: https://www.ndtvprofit.com/
Don't enter the stock market unaware. Read all Research Reports here: https://www.ndtvprofit.com/research-reports
Follow NDTV Profit here
Twitter: https://twitter.com/NDTVProfitIndia , https://twitter.com/NDTVProfit
LinkedIn: https://www.linkedin.com/company/ndtvprofit
Instagram: https://www.instagram.com/ndtvprofit/
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00:57 Good afternoon and welcome.
01:08 You're watching Market IQ on NDTV Profit.
01:11 I am Harsh Saita.
01:12 Quick check on where markets are.
01:14 Nothing to complain about.
01:15 Markets trading in a tight 90-point band.
01:17 But nonetheless, we are sticking and-- not just sticking,
01:22 but even above that 22,000, comfortably above that 22,000
01:26 mark where the Nifty is concerned.
01:29 Quick check on where the broader markets are at.
01:33 And if we can have those numbers,
01:34 you'll have it on your screen.
01:36 Broader markets underperforming the Nifty as we speak.
01:40 But in the green nonetheless.
01:42 So no complaints from a broader market perspective either.
01:45 They continue to hold out in the green.
01:47 Where the Nifty Bank is concerned,
01:49 it's up around 0.9% or thereabouts.
01:52 That will come up shortly on your screen.
01:53 But let's look at the Nifty Bank constituents
01:56 because the likes of an HDFC Bank
01:58 has done fairly well in trade, at least
02:00 at the start of trade today.
02:02 The Nifty Bank constituents, if we can have those.
02:05 And HDFC Bank doing fairly well in trade today.
02:09 That's, of course, continuing to be the case.
02:13 We are seeing that one stock itself
02:15 had around 51 points to the Nifty 50 today.
02:18 And outside of that, you have the likes of Reliance also,
02:22 which is up a solid 1 plus percent.
02:25 Both of those adding roughly 80 points to the Nifty.
02:29 So that's definitely a big plus which is coming through.
02:33 Quickly on to some of the sectors in focus.
02:35 You have the likes of a Nifty IT, which is up.
02:38 Even the Nifty oil and gas up a percent and a half.
02:41 Not much spoken about that one.
02:43 Nifty Media and Metal are the ones
02:44 which are trailing the only two major indices in the red.
02:48 Nifty FMCG looking absolutely flat as we speak.
02:51 But this is one such show where today
02:55 we have a guest on today's show.
02:58 We have Venkat Raman Srinivasan,
03:00 who's the executive chairman of eMudra,
03:02 to talk to us about the 200 crore QIP,
03:05 which the company has spoken about.
03:08 We've also had a release with regard
03:11 to the pricing of that QIP.
03:14 To talk to us about that and more,
03:16 welcome to NDTV Profits, sir.
03:18 Good having you.
03:20 - Thank you, thank you.
03:21 - So Mr. Srinivasan, talk to us.
03:25 Where do the fund proceeds go?
03:26 200 crore is a substantial raise
03:29 for the size at which you are at.
03:32 Where are you planning to put the funds?
03:34 You are managing your debt fairly well these days.
03:37 So just talk to us about how capital will evolve.
03:39 - Yeah, two, three areas.
03:41 The first area is because as you know,
03:43 we are a R&D-focused company.
03:46 So we have several product for the identity,
03:50 authentication management,
03:51 and then certificate authority product we have,
03:54 and also paperless transformation product.
03:57 Recently, even as part of the IPO,
03:58 we had developed three products,
04:00 IOT security, remote signing,
04:02 and certificate lifecycle management.
04:04 So in the continuance of that journey,
04:07 two, three major areas,
04:10 which is around the cybersecurity
04:13 we are going to develop product.
04:14 One is on the post quantum cryptography.
04:16 And the second thing is the fully homomorphic encryption.
04:19 And the third is the how to bring the PKI
04:22 in the mobile phone itself.
04:24 So these three are the new areas.
04:26 So part of the proceeds around 45 crore
04:29 will go in these three projects
04:31 will involve around 45 crore.
04:33 So that is one area.
04:34 The second area is as you are aware,
04:37 in the last one and a half years,
04:38 our US market is expanding
04:40 and we have also done a small acquisition in the US.
04:43 So we feel it will continuously expand.
04:47 So towards the working capital needs of the US market,
04:50 another 27 crore we have earmarked for that.
04:53 Then around 85 crore,
04:55 we have earmarked for some acquisitions,
04:57 either product acquisition or services acquisition
05:00 around the cybersecurity, digital transformation area.
05:04 And the balance around 40, 45 crore
05:06 may go towards the general corporate expenses.
05:09 So this is how the composition of 200 crore works out,
05:12 which is what we want to spend in the next 15 months.
05:16 Right, so this is the kind of 15 month pipeline
05:20 when it comes to your CAPEX plans.
05:23 What thereafter?
05:24 Are there any plans alongside to raise any debt as well
05:27 along with this?
05:36 Okay, so I think we have a bit of a tech issue
05:39 happening there, but we'll stick with the Mudra.
05:42 Let's quickly look at the stock itself.
05:44 It's doing fairly well in trade as we speak,
05:47 3.6% higher.
05:49 The QIP itself is going to be a 200 crore QIP.
05:53 We did speak about that.
05:55 The floor price for that is 443.
05:58 Of course, 5% discount at the discretion of the management
06:03 could be offered at the time of the QIP.
06:07 And the stock itself is trading well above that,
06:12 the price at the floor price,
06:16 which the management has set out.
06:18 In terms of its Q2 performance as well,
06:20 the top line looks extremely strong.
06:22 Just as a quick background check,
06:23 the top line continues to look robust
06:26 in terms of its growth number, 60% plus.
06:29 Your EBITDA number though has gone up by just 24%.
06:33 Therefore, diluting margins for the company,
06:35 EBITDA margin is now below the 30% mark.
06:39 We've seen over the last five to six years,
06:42 the company has been able to maintain
06:44 the roughly mid 30 kind of EBITDA margin,
06:47 except of course, FY21 being that COVID year.
06:50 But outside of that,
06:51 they've been able to maintain that EBITDA margin.
06:54 But let's try and understand more.
06:56 We have Mr. Srinivasan who's back.
07:01 Mr. Srinivasan, we were just trying to give our viewers
07:05 some perspective and best coming from you.
07:07 So first off, any plans with regard to debt raise
07:14 in parallel with this equity raise that you're doing?
07:17 You've spoken about the CAPEX plans.
07:19 So any debt raise in parallel to this equity raise?
07:22 - As of now, no plan for a debt raise.
07:24 - Sure, and if I can try and understand the trajectory
07:28 with regard to your top line and margins.
07:30 You know, your top line has grown extremely well.
07:34 What's the kind of clip now with the higher base
07:37 that you will be aiming for both in FY24 as well as beyond?
07:41 I won't ask you for Q3 specifically,
07:44 but if you can talk to us about FY24 as a whole
07:46 and FY25 or 26, at least in the medium to long term,
07:50 what's the kind of clip that one should look at?
07:52 - Yeah, if you see our top line, as you are aware,
07:55 we have grown from 130 crore to 180,
07:57 then 250 crore this year.
07:59 We are priced towards 360 crore.
08:01 That is what I have indicated
08:02 in all the investor meetings and all that.
08:05 And also we have indicated that we will do
08:07 about 30% EBITDA margin and roughly around 20% PERP margin.
08:12 Because what we have done is earlier we did better margin,
08:14 but now the margin is a little lower
08:16 because we are reinvesting the margin for growth.
08:20 So we have invested in a lot of senior people in the USA
08:23 and then we opened in Saudi Arabia,
08:27 we opened our plans in Qatar,
08:28 and then we opened a subsidy in Kenya.
08:31 So with all these things, reinvestment,
08:33 now the margin EBITDA is around 30
08:34 and the PERP is around 20
08:35 and we hope to maintain the margins at this level.
08:39 And also from a 360 level, maybe next one year,
08:43 we aim at a growth of around a little over 30%,
08:47 both including organic and inorganic growth.
08:49 For the organic growth purpose,
08:51 we are looking at two kinds of things.
08:53 One is maybe a product company which has some product
08:57 which are in the cybersecurity area.
08:59 But when we look at it, it will be a small company only,
09:02 we cannot go for a very big company.
09:04 The other kind of company, the service company,
09:06 which is in cybersecurity area,
09:09 where with that company, we may be able to,
09:11 with their end customer,
09:12 we may be able to sell the product.
09:13 So with all this, we are aiming at around
09:16 over a little over 30% growth for the next year
09:20 with the same kind of margin profile.
09:22 - Right, that makes sense.
09:24 30% growth plus roughly 30% margin
09:28 seems to be the way in which you seem to be going forward.
09:33 One last quick question I'd like to take.
09:34 So, with regard to the QIP itself,
09:38 what's the kind of participation you're expecting?
09:41 The mandatory limit is just about two investors,
09:43 but would you be looking at a larger bank of investors
09:47 that you will be tapping into for this QIP?
09:49 - Yeah, up to now, the reception is very good,
09:53 but the final book, we will be aware on Wednesday
09:56 and then close the book on Wednesday,
09:57 but up to now, the reception is really good.
10:00 - Understood.
10:03 Thank you for that perspective, Mr. Srinivasan.
10:06 It's been good talking with you
10:08 and good getting all that perspective from you
10:10 with regard to eMudra.
10:12 But let me quickly switch focus.
10:15 We've hit 22,000 now,
10:17 and we're gonna try and break down
10:19 what were the key milestones and sessions
10:22 which have led up to this rally.
10:24 Agam has a roundup of all of that, including valuations.
10:27 Agam, speak with us.
10:28 - Right, so, well, we have seen the Nifty
10:32 will claim 22,000.
10:33 At the moment, we are looking at significant gains.
10:36 It's been about 22% over the course of the last 12 months,
10:39 as far as the Nifty is concerned.
10:41 And of course, before this, the previous milestone,
10:45 which stood at around 21,000,
10:47 that was conquered back in December,
10:49 on the 8th of December specifically.
10:52 Let's move on and talk about how long it took, in fact,
10:55 to move from 21K to 22K.
10:58 Well, 26 days.
11:00 That's half as much as time
11:01 for the earlier to 1,000 point gains for the Nifty,
11:06 as you can see on your screen here.
11:08 Let's move on and talk about what we have, in fact,
11:11 seen with respect to valuations now.
11:14 Now, in terms of FY25, we're expecting the Nifty,
11:17 well, EPS to be somewhere around the 1,000 rupee mark.
11:21 And of course, FY26, this, of course, can be disregarded
11:24 because this number doesn't look correct.
11:26 But let's move on and talk about
11:27 the price to earnings ratio based on that.
11:30 So as far as your FY25 price to earnings ratio is concerned,
11:34 that stands at around 22 times.
11:37 And for FY26, that's at around 20 times.
11:40 Now, remember that FY25 and FY26
11:43 are still at a significant discount
11:46 to the mean of the previous five years.
11:49 That is around 25 times.
11:51 This also means that the Nifty has more space,
11:54 not only to move towards the mean,
11:57 but also move quite high, and higher than that, beyond that.
12:01 Now, in terms of the gainers,
12:03 we did see gains in Tata Consumer, Wipro, and Bajaj Auto,
12:06 which were, in fact, the top gainers
12:08 as far as the Nifty goes.
12:10 And in this period, along with Adani Ports and Hiro Motocorp.
12:14 In terms of point contributors,
12:17 we had the most amount coming in.
12:19 Nearly a quarter of these points came on account
12:22 and on the back of Lance Industries,
12:24 followed by about a 10th, a little over that,
12:27 from Infosys and TCS.
12:29 And of course, then you had HCL Technologies
12:31 and Bharti Airtel as well.
12:33 But in terms of losers, and let's take a look at those
12:36 which, in fact, weighed down on the index,
12:38 we did have a little bit of weakness
12:40 as far as Maruti Suzuki, HTFC Life,
12:42 and Ayesha Motors is concerned.
12:44 The losses were not significant,
12:47 and certainly nowhere close to the kind of gains
12:49 that we've seen through the course
12:51 of the last up move in the last 26 odd days.
12:54 The question is that when do we, in fact,
12:57 see the Nifty move above the mark of 23,000?
13:01 It's gonna be a little bit of resistance,
13:02 but well, no harm in dreaming about it for now.
13:06 Well, yet another milestone as far as the Nifty is concerned.
13:09 - Well, yet another milestone where the Nifty is concerned.
13:13 Thanks so much for that, Agam.
13:14 But India's wholesale inflation,
13:16 I'll shift focus to macros,
13:18 has risen to a nine-month high, 0.73% is where
13:22 that's coming for the month of December.
13:24 Now, we have Pallavi here to give us
13:26 better perspective on that number.
13:28 Pallavi, talk to us about what this means.
13:31 - Hi, so you're right.
13:34 WPI inflation has come in at a nine-month high
13:38 for the month of December.
13:40 The index is at 0.73%, and that's compared to a figure
13:45 of 0.26% that we saw in November.
13:49 Now, we saw retail inflation come in on Friday,
13:53 and that's been following a similar trajectory as well.
13:56 Retail prices were up 5.7%, and that was a four-month high.
14:01 Likewise, WPI is also on a rising trend,
14:06 and that's largely led by the base effect.
14:09 At the same time, last year, we'd seen the index,
14:13 Wholesale Price Index, remain in de-acceleration
14:16 for several months.
14:18 Now, let's have a quick look at some of the key inputs
14:22 in the index.
14:23 Inflation in manufactured products,
14:26 that's the largest component of the Wholesale Price Index,
14:30 was at -0.7%, so that continues to remain
14:35 in de-acceleration for the 10th straight month.
14:38 Primary articles inflation came in at 5.7%.
14:42 Inflation in food articles rose to 9.4%.
14:46 Vegetable prices, one of the key inputs
14:49 of Food Price Index, was up 9.4%.
14:54 Non-food articles was down 4.7%,
14:58 and fuel and power stood at -2.4%,
15:01 so that's also remained in de-acceleration
15:04 for several months now.
15:06 The outlook going forward is that the index
15:09 is likely to continue to remain benign,
15:12 hinting at continuing comfort on input prices.
15:16 - Right, thanks so much for all of that perspective.
15:21 With regard to macros, key focus continues to be inflation,
15:25 and that will determine where it's go,
15:27 of course, through 2024.
15:29 But, you know, we're gonna take a short break for now.
15:32 Stay tuned to NDTV Profit.
15:33 On the other side, what we're gonna do is,
15:35 we're gonna take you through Praveik 10th City in Ayodhya,
15:38 where we spoke to the general manager, Krishan Kant,
15:43 about the current functioning, growth outlook
15:45 of the establishment.
15:47 So stay tuned for that very interesting conversation.
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18:50 - Welcome back, you're watching Market IQ on NDTV Profit.
18:58 You know, what's the one sector that's been buzzing Friday,
19:02 plus today it's been Nifty IT.
19:04 The kind of gains that we've seen,
19:06 almost a seven plus percent rally on the Nifty IT,
19:09 and it's largely because the IT giants have posted
19:13 a decent-ish quarter,
19:14 a better than expected quarter of earnings.
19:17 But what next for the segment?
19:19 Where should one see it?
19:20 How should one look at earnings?
19:22 What should one make of the rally?
19:23 Tushar is here with all of those details.
19:26 - Thank you so much, Harsh.
19:28 Nifty IT has, in the year to date,
19:30 has completely outperformed Nifty 50 so far.
19:33 That's all down to the fact of the Q3 earnings
19:36 that we have seen delivered by TCS, Infosys,
19:40 Wipro, and FCL Tech.
19:43 So the market believes that this is the bottom.
19:45 Essentially, it believes that this is the end
19:48 of the IT slowdown, and the market is also pricing
19:51 in softer US macros and Fed rate cuts.
19:55 IT firms are also seeing some green shoots in deal-making.
19:58 Profitability has been maintained,
20:01 despite a reduction in the top line.
20:03 But let's first take a quick look
20:04 at the big four earnings so far.
20:06 First up, TCS.
20:08 First, the numbers up here.
20:10 The key takeaway is TCS is set to gain in a big way
20:14 when discretionary spending returns.
20:16 All the fundamentals are in place.
20:18 Secondly, Infosys.
20:20 One key takeaway from those numbers is that
20:22 while guidance has been tightened to about 1.5 to 2%,
20:28 it has from 1 to 2.5%, a strong ramp up in deals
20:32 into FY25 can propel Infosys to 7.5% growth in FY25.
20:37 As far as FCL Tech is concerned,
20:41 the ramp up in the Verizon deals,
20:44 as well as the ASAP deals, contributed handsomely
20:46 to the top line growth in terms of Wipro.
20:50 The key takeaway is that Wipro is seeing green shoots
20:54 in discretionary spending in the consulting business,
20:57 as well as in the (mumbles) growth in the order inflow.
21:00 If you break down the key metrics,
21:02 where do all these companies stand?
21:05 So in terms of revenue, TCS has grown by 1.7%.
21:10 So HCL Tech was an outlier with 6% growth.
21:15 The EBIT, in terms of profitability,
21:17 all the companies have maintained EBIT numbers
21:19 at about 20% of whatever they have been projecting so far.
21:23 The deal value is also at,
21:26 the deal value also robust at 8.1% for TCS.
21:30 Most of them have delivered
21:31 on the total contract value front as well,
21:34 but the conversion into revenue is what is the problem.
21:38 Attrition rates, the attrition rates have actually come down
21:43 to pre-pandemic levels, as we can see here.
21:45 They had gone up to about 20% during the pandemic,
21:48 now they're back down.
21:49 But the problem is the headcount.
21:51 Net headcount has reduced for three of the four companies.
21:56 Only HCL Tech has hired some people in Q3
22:00 because of the deal rampers that had not happened.
22:02 Remember, Verizon, ASAP, Inc.
22:04 deals happened during this quarter.
22:06 Now what does that mean
22:07 for the valuations of these companies?
22:09 These companies still, despite the run-up in the stock,
22:12 are fairly valued as compared to the three-year PE average
22:15 that you are seeing.
22:16 Back to you, Harsh.
22:17 - Right, very interesting.
22:19 Some of those data points that were flashing on your screen
22:21 on the nifty IT, despite the rally not looking
22:25 that expensive, but unfortunately we're completely
22:29 out of time on this edition of the show.
22:31 From all of us who put this show together,
22:34 Market IQ on NDTV Profit, thanks so much for watching.
22:38 Stay tuned to NDTV Profit.
22:40 We will continue to get all the news first.
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27:05 - Hi, thanks so much for joining in.
27:07 You're watching the Mutual Fund Show,
27:08 and this is NDTV Profit.
27:10 My name is Alex Mathew.
27:11 Like the name suggests,
27:12 this show is all about mutual funds,
27:14 but the objective is to get you actionable insight
27:18 so that you can make your investment decisions
27:22 with confidence.
27:23 Now, part of what we like to bring you on this show
27:25 as an offering is the opportunity
27:28 to understand the perspective of the people
27:30 that manage your money, the fund manager.
27:33 And from that perspective, I've got my guest today.
27:37 We've got Abhishek Singh,
27:39 who is a fund manager of a fund that has done quite well
27:42 over the last one year, particularly in its category.
27:45 It stood in the top of the category in 2023,
27:49 and it has comfortably beaten the benchmark.
27:51 Not something that we say very often
27:53 for the category as a whole.
27:54 Abhishek, thank you so much for taking the time
27:57 and pleasure speaking to you on NDTV Profit.
27:59 - Tim, yeah, Alex, thanks.
28:01 Thanks for having me on the show.
28:02 - So let's start with that,
28:03 because often the criticism that is leveled
28:08 against fund managers in the large cap category,
28:10 and we're talking about the DSP Top 100 Equity Fund,
28:14 is that there is a difficulty in beating the benchmark.
28:19 Why was that something that was achievable in 2023?
28:23 What worked in your favor?
28:24 - So you are right, Alex.
28:28 It has been one of the most challenging categories
28:32 for alpha generation, in the sense it was very,
28:34 it has been very hard to beat the benchmark.
28:37 But a lot of factors have kind of failed last year.
28:41 The rally was broad-based.
28:43 It was not concentrated in certain segments.
28:46 Also, if you look at the history,
28:50 typically strategies that have kind of diverged
28:53 from the indexes, they have had a better chance
28:57 of generating alpha, and this is something
29:00 that we have embraced in the last couple of years.
29:03 So those two factors helped a broad-based rally,
29:06 and running a relatively high active share position
29:09 is what kind of helped us.
29:10 - Okay, so that's a good springboard, I think,
29:14 to talk about this in more detail.
29:17 So help me first, before we get
29:19 into the portfolio construction of it,
29:21 to understand how things work.
29:24 What is the strategy of the fund house as a whole?
29:27 What is your own strategy and your ethos
29:30 when it comes to building a portfolio?
29:32 - So Alex, the concept of the large-cap category
29:35 is that 80% of the weight in the fund,
29:37 they have to come from the top 100.