HDFC is in a strong technical uptrend and seems to be straining towards its all-time high of around Rs3,250 while Infotech Enterprises is expected to report net profits of around Rs400 million, down 25% on a q-o-q basis
HDFC
HDFC Bank has been buying out loans from HDFC, putting pressure on its loan growth. The Street expects loan growth to be anywhere between 11% and 18%. A higher number could act as a big trigger. The general expectation is that financial companies that are highly dependent on wholesale funds could see pressure on cost of funds (besides, a higher base rate is also likely to add to pressure) so watch out for what the management says about this. HDFC had recently (early July) launched a new scheme where its loan for the first year would be available at 8.25% and the second year at 9.25%. Keki Mistry, VC, HDFC had said in a televised interview that he did not expect this to impact margins since funds were already tied up at a certain rate with the new scheme in mind.
Profit growth estimates range between 20% and 27% (with some like HSBC estimating it at a high of 40%). Spreads are seen declining marginally from 2.3% in Q4. Operational income could decline substantially sequentially, but could be up between 18% and 28% year-on-year (y-o-y). Treasury income is seen lower this quarter. Disbursements and approvals are expected to improve between 22% and 25%. The stock is in a strong technical uptrend and seems to be straining towards its all-time high of around Rs3,250.
Infotech Enterprises
The Hyderabad-based company is expected to report net profits of around Rs400 million, down 25% quarter-on-quarter (q-o-q). Revenues are expected to be around Rs2.5 billion. Watch out for ramp up of the Hamilton deal (in January this year, Infotech signed a 4-year deal with Hamilton Sundstrand Corp). This will be the first quarter in which the full impact of its Daxcon acquisition (a US-based engineering services company) will be felt. Margins are likely to fall in line with industry on wage hikes. — Munira Dongre