Looking the the Chart, TECHM (CMP: 483) has immediate support around 477-468-462-455 zone. Consecutive closing below 455, it may further fall to 440-428-420-414-390-363-349 area in the near term under worst bear case scenario.
On the upside, technically sustain above 481, immediate target may be 491-500 & 515-525 zone and sustaining above that, it may target 536-552-565 in the short term. Only consecutive closing above 565, TECHM may target 586-610-640 in the mid term. In the long term, sustaining above 640, it may scale up to 680-748 & 870 territory in the bullish market scenario (FY:16-18).
Bottom Line: Technical Trading Levels (Positional)
| SL</>5 | FROM SLR | |||||||||
| TECHM | CMP | 483 | ||||||||
| T1 | T2 | T3 | T4 | T5 | T6 | T7 | SLR | |||
| Strong > | 475 | 481 | 491-500 | 515-525* | 536-552 | 565-586* | 610 | 640 | 680 | <467 |
| Weak < | 467 | 460 | 455* | 440 | 428 | 420-414 | 390 | 363-349 | >475 | |
TECHM plunged yesterday after management warning about guidance & profit margin amid higher US visa sponsorship costs and seasonally weak lower revenue for its mobile telecom clients. This is the third company after Persistent and KPIT which gave such profit warning and as a result the whole IT outsourcing sector are now in some type of doldrums. Though the company (TECHM) said that efforts to improve operational levers and cost control parameters will show its impact from Q3/FY16 onwards, market is bracing for downgrading and it had already crashed 10% yesterday itself and touched its 52 weeks low.
There is a apparent tug of war between different analysts to rate the TECHM right now. As par CS, new target is 700, whereas CLSA is indicating it as 450 citing structural risks, poor margin management etc.
Going ahead, some favorable currency movements, project cost management along with expected improvement in operational metrics to achieve synergy with its recent acquisitions will dictate the actual bottom line of TECHM apart from IT spending recovery in USA/EU. Also the coming US presidential election might bring some more headwinds for all Indian IT Outsourcing company, including TECHM for the H1B VISA issue (turning into vote bank political factor there as well), but going by the time & price action, that factor may be already discounted by the market.
There will be ample opportunity for both Indian & Global IT players to participate in "Digital India" theme.
But the real headwinds for Indian IT companies in future may come from lack of innovations and new technologies such as automation & off-the-shelf software and analytics, big data and cloud computing solutions. Indian IT companies are too much dependent on inexpensive programmers rather than adopting new technology both organically or inorganically.
Recent acquisitions of various IT companies are largely driven by desire to enter new markets & industry segment or quickly expand business, which is short term in nature and not intended to adopt new technology for long term vision.
There are few exceptions like Infy and TCS, which did some (one & two) tech savvy acquisitions, but more need to be done in order to survive in the days ahead. Infy, being a cash rich company, might acquired better.
Tech-M too acquire around nine companies recently, but none of them fall into this high tech category and all of them are intended for more capabilities in older technologies or business strategy for BPO & network management services. Thus Indian IT companies, including Tech-M need to acquire more such high tech company in order to be competitive with their overseas peers in the days ahead.
As par BG metrics, current median valuation of Tech-M may be around 565 and projected fair valuations are around 610-680-750 (FY:16-18) in the current market parameters.
| SCRIP | EPS(TTM) | BV(Act) | P/E(AVG) | LONG TERM | SHORT TERM | MEDIAN VALUE | 200-DEMA | 10-DEMA |
| TECHM | 27.32 | 127.37 | 21.62 | 590.60 | 535.34 | 562.97 | 590.54 | 485.21 |
| TECHM | 32.01 | 143.5 | 21.62 | 639.29 | 579.48 | 609.38 | 590.54 | 485.21 |
| TECHM | 39.18 | 162.15 | 21.62 | 707.27 | 641.10 | 674.18 | 590.54 | 485.21 |
| TECHM | 47.05 | 183.25 | 21.62 | 775.05 | 702.54 | 738.80 | 590.54 | 485.21 |
No comments:
Post a Comment