Mayuresh Joshi of Angel Broking told CNBC-TV18, "The IT sector will have a lot of headwinds in Q3 and Q4 and these are well known facts that the markets have probably known for the past so many years. Having said that, the Chennai impact and the Tata Consultancy services (TCS) call on that, the EBITDA margin would have a definite hit on that."
"However, over the next two years, our own take is that the dollar revenue growth should be quite reasonable for companies like TCS. The client mining activities that they have done, the order book that they are probably maintaining – 30 percent higher as the management indicated that their best order book clearly is pointing to signs that TCS is building on its client mining activities quite well," he said.
"The utilisation levels have held up quite well, you take including trainees, excluding trainees for a company like TCS. The valuation premium that TCS commanded over Infosys had narrowed down quite significantly over the past quarters. So, the pecking order in the top tier IT names stands as Infosys, TCS and HCL Technologies for us."
"TVS Srichakra is a market leader when it comes to the two wheeler OEM market clearly catering to all clients within that basket whether it is Bajaj Auto, Honda, Hero Motocorp or Yamaha India. The replacement market has significantly increased for the company like TVS Srichakra which contributes 40-45 percent. The fall in raw material prices has probably aided EBITDA margins and they will continue to do so over the next few quarters. They have got a tie up with Michelin for outsourcing tyres on the two wheeler side and again I think the capacity at around 2.3 lakh tyres a month, they are expanding that slowly and steadily."
"In terms of company financials, the topline is expected to grow at around 11 percent over the next two years, close to Rs 2,338 crore mark. If you are talking about EBITDA margins because of the fall in both natural rubber as well as synthetic rubber, we expect EBITDA margins to hold up to 15 percent. Again it has repaid a huge amount of debt so it has become a debt free company. So, clearly the bottomline impact would be quite stupendous over the next couple of years. Even on valuations, at 10 times it is trading at quite reasonable valuations compared to its historical averages," he added.
"Clearly the government is also mulling at looking at some sort of anti-dumping duty coming through on the Chinese imports. That has been a big concern for a lot of these tyre guys and when that comes through it is going to be a bonus for companies like TVS Srichakra apart from the financials it might post. So, I am expecting the company to post decent numbers in next few quarters. We have got a target of Rs 3,240 over the next nine months."
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