Monday would be my portfolio re-alignment and I may spread my distribution on Hindalco, Anant Raj, Tata Steel, Exide and FTIL. It all depends on how well Tech Mahindra Q1 earnings align with my estimates on monday.
Let`s do a small artihmetic. Our Estimation would be a net income of 3500 C +- 100 Cr. Employee costs would be around 1700 Cr. Merger expenses and other expenses would be around 900 Cr. EBITDA would be around 800-900 Cr.
Now comes the Q2 expectation :
The aim of the merger is to prune other expenses and employee costs.
We`d all like to see how TechM manages to prune those expenses. We`d like to see a reduction of 500 Cr. on employee costs and around 200 Cr. on other expenses, maximise the EBITDA to be around 1500 Cr.
Prognosis : combined Q1 would probably be a sum-up of both TechM and MSAT statements, with additional merger ops. expenses. We can expect the Net around 600 Cr. +- 50 Cr.
Stupid comparison : This would be around 2.5x Q1 FY`13. I`d really like this to be the news
Reality would be that the combined entity had successfully managed to stay afloat just as what Infy has done this Quarter.
We can see the effect on Eq2 and Eq3 and the numbers can be manipulated to show the world an optimistic sequential growth .... hahaha.. This`ll hold good, even if the combined entity stays dry without any new deals.
Bottomline is that we don`t have to worry for another two Q`s, we can see our investment grow with a slope of atleast 25 and if TechM manages to pull some hefty deals, we are really on cloud nine :)
p.s
Let`s look at HCL. The numbers are the same as the combined Entity`s. Voila!!! We directly compete with HCL!! The only aberration is that TechM is almost void on new telecom contracts. We may even see MSAT as the sole contributer for the earnings.
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