Disagree with Two Influencing Views ~ that of Deepak Parekh on his disagreeing with Arvind Kejriwal’s way to expose Corruption and that of CLSA on advising to switch from TCS to Infosys and HCL Tech

Disagree with Two Influencing Views…

~ that of Deepak Parekh on his disagreeing with Arvind Kejriwal’s way to expose Corruption  and

~ that of CLSA on advising to switch from TCS to Infosys and HCL Tech

Deepak Parekh on his disagreeing with Arvind Kejriwal’s way to expose Corruption

Have healthy respect for Deepak Parekh ,Eminent Banker and Well Respected Finance Personality ~ his uncle the legendary Housing Finance Guru H T Parekh and my grandfather and eminent Chairman banker, M G Parikh were very good friends ~ in fact when I returned from overseas in the 1980s , my grandafther told me he had discussed my career prospects with H T Parekh and the latter had simply said “Send him to me” ~ I never did go as it was an independent and patriotic streak in me that made me return to India from a hugely rewarding career in one of the Big 4 Firms and I was not mentally prepared to lose that streak

So I was a bit astonished to read Deepak Parekh’s views to a group of top Industrialists that Corruption cannot be eradicated from India and that he disapproves of activist tuned politician Arvind Kejriwal’s way to expose Corruption and will not vote for his party candidates or him if he continues on this exposing path

In my view ,we need more Kejriwals in our System !

Read in an interview that Deepak Parekh loves Chocolate Coated Biscuits and my wife makes great ones ! ~ so maybe if I send him some,he may change his view !

CLSA on advising to switch from TCS to Infosys and HCL Tech

I’m  frowning here……

For the past two years I’ve been advocating switching from Infosys to TCS as I was disillusioned with the leadership in Infosys after Narayan Murthy and Nandan Nilekani handed over the reins to others ~ While TCS happily progressed to record profits and strong orders,Infosys suffered several setbacks ~ in fact just yesterday they announced they are delaying the intake of fresh 17000 + recruits  and cutting back on business class travel in a major austerity drive ~ In June 2012 too they had problems in absorbing 28000 recuits then ~ we’ve seen Infosys Share Price react or go nowhere while TCS simply surged to record highs in 2012 till date

TCS   v/s  Infosys  on BSE

Scrip

Opening Price in Rs  Jan 2011

Closing Price in Rs

December 2011

% Movement

In 2011

CMP November 5,2012

% Movement

In 2012 till date

% Movement

2010-2012

Bonus Issue

TCS

1165

1161

Neglible

1329

Up 14%

Up 14%

2009  1:1

2006  1:1

Infosys

3449

2765

Down 20%

2379

Down 14%

Down 31%

2006  1:1

Market Cap in Rs crs of IT Majors as on November 5,2012 BSE Closing

IT Major

Market Cap in Rs Crs

Market Cap Ranking

TCS

260063

2

Infosys

136594

9

Wipro

89327

15

HCL Tech

42589

33

268510

CLSA has come out with a Report advising switching from TCS to Infosys and HCL Tech largely on the grounds of higher expectations  v/s reality that may emerge  going forward that belies these expectations build up given the brilliant last quarter by TCS and the fact that it quotes at 17 time forward while Infosys is 13 times only and moreover the total market cap of TCS is larger than the aggregate of markets caps of Infosys,Wipro and HCL Tech ~ Actually it’s a little less ~The CLSA analyst has a view that Infosys needs only to give a more positive guidance for the Valuation gap to be reduced ~ His other view is interesting and can influence top down investment strategy ~ that the IT Sector no longer is a dependable Investment Theme

I don’t see Infosys recovering traction any soon and I continue to prefer TCS over Infosys and am continuing to recommend switching from Infosys to it

See from some Data I have provided above that TCS  moved up 14% in 2012 till date while Infosys continued to fall from 20% in 2011 to a further 14% drop in 2012 till date ~ In fact it has dropped 31% in the 2010 to 2012 period till date ~ A way of looking at it in relative terms TCS has gained 45% !   (up 14 % itself and aggregated with avoiding the 31% drop in Infosys)  ~ It also has rewarded shareholders with two 1:1 Bonus issues in 2006 and 2009 while Infosys’s last Bonus Issue was 1:1 six years ago in 2006

In Market Cap terms TCS is playing Hide and Seek with Reliance Industries as leading Market Cap Company in India ~ It’s No 2 today in Ranking and it’s Market Cap was just a shade below that of Reliance ~ It’s been No 1 too on many days this year ~ Also TCS’s Market Cap is a little below the agregate market cap of the other three IT Majors in the Top 50 Market Cap Companies in India

Would be interesting to see if  TCS Management reacts to this CLSA Report…………

I’m not really concerned with the TCS v/s Infosys argument too much ~ what I’m concerned with is whether TCS will continue it’s uptrend and give my clients an absolute return going forward ! ~ In my Opinion it will and it remains a Core Segment Holding

Any views out there on any or both of the above ?

Cheers !

6 thoughts on “Disagree with Two Influencing Views ~ that of Deepak Parekh on his disagreeing with Arvind Kejriwal’s way to expose Corruption and that of CLSA on advising to switch from TCS to Infosys and HCL Tech

  1. Hello sir last time kejriwal opened the names of corporates mukesh ambani and tata and their political influence relations, to the public, chances are may be he is involved somewhere, like them he is also an eminent corporate and afraid now so attacking kejriwal now

  2. sir i know one thing – the way tcs getting projects from psu companies and their implementation.sorry to say tcs is not good.may be they treat orders from western countries well.When it comes to our psu companies tcs is simply cheating.so i wont suggest tcs

  3. Interesting Point Krishan ! Had not crossed my mind ! ~ but finding it difficult to see how HDFC Group could be involved in any machinations !

    …and Ramurthy ,TCS Shareholders will not support your view ! and Infosys Shareholders must be rueing why they had not switched to TCS !

  4. Would TCS n Icici bank be. A laggard as they are now in largecap n stalwart category?shudnt we convert them into quality midcap co which can double its market cap like Astral poly

    1. Vivek,switching from Core Mega Cap Companies like TCS to surging Mid Cap ideas like Astral Poly may be appealing on hindsight as the latter has moved brilliantly this year to give 200% returns on non linear Earnings Growth and Potential going forward with exclusive licensing arrangements with Lubrizol ~ It’s Risk Profile and mindset issue that guides Investment Strategy and Approach ~ It’s a question of being comfortable with the investment and sustainability of Earnings and the Valuation into the Long Term ~ Can Astral sustain Earnings Growth for the Long Term,albeit even at lower rates and therefore can an Investor be assured that Share Price,even if it corrects from Rs 370 current levels,it will bounce back to surging in the years ahead ~ The Conviction may not be too strong at this stage ! though one has made superb gains in it this year and not so in TCS or ICICI Bank ~ but that does not mean to switch from these two to Astral Poly or in concept to another great mid cap idea!It will disturb the core portfolio balance and also arguably add more risk to it ~ that’s my view! ~ having opined thus,I can understand the concept of absolute returns and Astral Poly has been a superstar here this year ~ but switching from Core requires deeper contemplation and a solid conviction that the risk you’re taking to enter a mid cap idea you like will pay off well ~ Based on a Clients Risk Profile I retain a certain Core Segment % always in the portfolio ~ Cheers !

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