| | | Question of the Week What do Indra Nooyi, former chairperson of Pepsico, and popular Tamil actress Samantha Ruth Prabhu have in common? | | |  | Here's a great value proposition A digital subscription to Mint premium can be yours at just ₹213 per month. Check out the convenient and affordable plans we have for you here. | | Good Morning | | The News in Summary India’s Big 4 IT services firms announced their second quarterly earnings, with Tata Consultancy Services, Infosys and HCL Technologies posting better-than-expected numbers while Wipro lagged. Both Infosys and HCL Technologies also revised their guidance upwards, but analysts warned that the impact of the global economic slowdown would start showing up only in FY24. Elsewhere, Singapore Airlines confirmed Mint’s earlier story of a possible merger between Vistara, which has a 49% stake, with the Tata group’s latest airline acquisition, Air India. Meanwhile, the Adani group is in talks for major fundraising, while Pepsico India reported double-digit volume growth in its beverage business in India in defiance of the slowdown in the FMCG space. Finally, under-fire Brickwork Rating managed to get a temporary stay on Sebi’s winding-up order. | | |  | | | | TCS Stems the Tide Market leader TCS silenced analysts who have been predicting a downturn in the fortunes of Indian IT services firms by posting better-than-estimated September quarter results. Belying fears of clients in its key markets of the US and Europe cutting tech investments on apprehensions of a coming recession, the firm posted an 18% increase in its revenue from a year ago while profit rose 8.4%.Significantly, the company reported an order book of $8.1 billion, a growth of 15.4% from a year earlier. However, the profit margin narrowed marginally though the company expects the attrition situation that has pushed up costs for IT firms to start easing off. While predicting double-digit growth for FY24, TCS chief executive Rajesh Gopinath did sound a cautious note about long-term deal decision-making. The company warned that the operating environment is “challenging” and warrants “vigilance”. | | | | Infosys Up, Wipro Down in Q2 Rival Infosys also posted impressive numbers, with revenue for the quarter ended 30 September up 18.8% from a year earlier in constant currency, while operating margin widened to 21.5% from 20.1% thanks to cost optimization and currency tailwinds. Significantly, the company raised the lower end of its FY23 revenue growth guidance from 14% to 15%. The Infosys board also rewarded shareholders, announcing an interim dividend of Rs 16.50 per share, an increase of 10% over the FY22 interim dividend and a share buyback of Rs 9,300 crore. However, despite the stellar numbers and a healthy deals pipeline, its CEO Salil Parekh also flagged concerns about the economic outlook. Its Bangalore twin Wipro reported a 9.27% decline in its consolidated profit from a year earlier, and its consolidated revenue grew 14.6%. What will worry CEO Thierry Delaporte is the continuing fall in Ebit margin, which dropped 270 basis points to 15.1% compared to 17.8% in the corresponding quarter of the previous year. Another Top 4 firm, HCL Tech’s fared better with its consolidated revenue in the quarter under review climbing 19.5% from a year earlier while net profit grew 6%. The company also raised its revenue growth guidance for FY23 to 13.5-14.5% in constant currency compared to 12-14% projected earlier. In its post-results press conference, Infosys CEO Salil Parekh and CFO Nilanjan Royanswered a wide variety of questions, some of which have a wider bearing on the IT services industry. Take a look: | | |  | | | | | | | | Singapore Airlines Confirms Potential Vistara Merger with Air India Singapore International Airlines (SIA) confirmed talks with its joint venture partner, the Tata group in Vistara, to explore its potential integration with Air India. A filing to the Singapore Stock Exchange said that “confidential discussions” were underway to “deepen the existing partnership”, though no definitive terms have been agreed upon between the parties. An earlier Mint report mentioned the terms of the proposed corporate structure whereby Air India and Vistara would be housed under a new joint venture, in which SIA would hold a minority stake of up to 25%. Currently, Tata has a 51% stake in Vistara, while the rest of the 49% is with SIA. | | | | Adani in Talks to Raise $10 billion The Adani group is talking with investors, including Temasek, Singapore’s sovereign wealth fund GIC, and other wealth and private equity funds, to raise at least $10 billion to fund its ambitious expansion plans. The mega fundraising will entail selling stakes in Adani Group firms or promoter group-associated entities. The one hitch in the plan seems to be the rising prices of the shares of the group’s listed firms, which makes the pricing of the deals tricky for investors. Separately, the Gautam Adani-led conglomerate, which recently acquired Ambuja Cements Ltd and ACC Ltd from Switzerland’s Holcim Ltd, denied reports that it was evaluating the possible acquisition of the Jaypee Group’s debt-laden cement business. | | |  | | | | Brickwork Gets a Break There was a minor reprieve for Brickwork Rating after the Securities Appellate Tribunal (SAT) stayed the 7 October order of the Securities and Exchange Board of India (Sebi), cancelling the rating agency’s licence. A final hearing on the matter will occur on 15 November, and until then, Brickwork cannot take up any new rating assignment. Just last week, Sebi, listing several violations, including lack of independent analysis of financial projections given by companies and delay in recognizing defaults and conflict of interest, had cancelled Brickwork’s licence and directed it to wind up operations in six months. Since 2016, Sebi has been tightening disclosure rules for credit rating agencies to boost transparency and accountability after several sudden sharp changes to corporate ratings. The Brickwork order was its toughest regulatory action as part of this exercise. | | | | Indians Quench Pepsi’s Thirst FMCG companies in India are feeling the heat of sluggish demand in rural markets and rising inflation. But one food and beverages company, PepsiCo India Holdings, reported double-digit volume growth in its beverages business during the quarter ended 3 September. Announcing its quarterly results, PepsiCo said that while net revenue in the AMESA (Africa, Middle East and South Asia Region) region rose 4% from the year-ago in the period, volumes in the beverages unit grew 11%, primarily reflecting double-digit growth in India. For the quarter, the company posted net revenue of $21.97 billion globally, ahead of analyst estimates. Buoyed by its performance in developing and emerging markets like India and China, it expects full-year organic revenue to increase by 12%. | | | | Last Word India Inc. doesn’t like too much scrutiny. So, not surprisingly, a company law committee recommendation for joint audits of certain categories of companies by more than one audit firm has sent corporate representatives scurrying to the ministry of corporate affairs, highlighting the demerits of the proposed rules. Their contention is that the new rules will just increase compliance costs but may not improve the quality of audits. In 2021, the Reserve Bank of India made joint audits mandatory for financial entities with a balance sheet of more than Rs 15,000 crore, a rule that public sector companies and lenders have since adopted. The committee which recommended the new provision had reasoned that joint audits could bring in more transparency, improve quality and reduce auditor concentration as it will be difficult for company management to influence more than one auditor. Cynical as it sounds, that worries private companies that want to stay outside the ambit of the new rule. | | Answer to the Question Both Indra Nooyi and Samantha Ruth Prabhu did their schooling at Holy Angels Anglo Indian Higher Secondary School in T. Nagar, Chennai. | | | Do you have any questions? Send in your queries to sundeepkkhanna@gmail.com Were you forwarded this email? Did you stumble upon it online? Sign up here. | Please share your feedback with us What do you think about this newsletter? | | Written by Sundeep Khanna. Edited by Saikat Chatterjee. Produced by Divneet Singh. Send in your feedback to newsletters@livemint.com. | | | | | Download the Mint app and read premium stories | | | | | | View in Browser | Privacy Policy | Contact us You received this email because you signed up for Mint Top of the Morning or because it is included in your subscription. Copyright © HT Digital Streams. All Rights Reserved | | | | |
