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Re: SAY versus INFY, WIT. Should I buy more Satyam, more Infosys, or buy some Wipro stock? January 26, 2007

Posted by deminvest in IFN India Fund, India Investing, INFY Infosys Technologies, investment, SAY Satyam Computer Services, Single stocks, stock I own, stocks, WIT.
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I was answering to a comment… and ended up writing a post.

1) Say is much smaller and so far it is not competing for market Leader Spot. Revenue of SAY is smaller and growing slower:

Satyam Computer Services Ltd. (SAY):
Revenue: 1.38B Qtrly Revenue Growth (yoy): 31.30%
Infosys Technologies Ltd. (INFY):
Revenue: 2.90B Qtrly Revenue Growth (yoy): 44.40%
Wipro Ltd. (WIT):
Revenue: 3.09B Qtrly Revenue Growth (yoy): 43.30%

2) Analists expectation of future earnings are lower for SAY, but its price on earning ratio makes it cheaper:

Trailing P/E (ttm, intraday):27.26

Forward P/E (fye 31-Mar-08) 1:23.21

Wipro Ltd. (WIT):
Trailing P/E (ttm, intraday): 40.74
Forward P/E (fye 31-Mar-08) 1: 31.11

Infosys Technologies Ltd. (INFY):
Trailing P/E (ttm, intraday): 41.76

Forward P/E (fye 31-Mar-08) 1: 30.53

We can notice that SAY has a lower P/E ratio, but that is not expected to go down very much ( from 26 to 23)

WIT and INFY are more expensive, but expected to grow so fast that its P/E will go down fast ( from 40 to 30)

Those companies are great Indian IBMs, growing fast, stealing westner customers because of their lover prices and taking great chunks of India and China computer and outsourcing markets.

The price of WIT and SAY went up 20% in a year, INFY was up 50%.

I really think those 3 companies are great. I think I will buy WIT just because I already own a few SAY and INFY.

Comments»

1. retirein - January 29, 2007

You know, you really should consider the shortage of quality workers the Indian IT firms experiencing. Also, SAY, in my opinion, is the worst of the three just because of its small size. The big firms like INFY and WIT will take away good workers with better pay and benefits. It is why SAY is not growing as fast and it is whya SAY is having difficulties. Two can survive and stay competetive in the same market. Never three. Three is always a crowd. SAY is the weakest link. Of course, all just my opinion, not based on any scientific study or poll.

2. deminvest - January 29, 2007

Don’t worry! Nobody around here really studies 🙂 If we had, we would have graduated at Harvard and we would be among the big guys… telling everybody else, with great authority, where to put (an maybe lose) their money.

We don’t study, but still need to find a place to put our hardly earned dollars. Unfortunately we need to find that out by ourselves, because we don’t trust too much the “big guys” when they speak “for our good and for our happinesss”.

India has excellent universities and a much younger population than China or the West.

Saytam itself is so involved with higher education that they run their own university:

http://www.indiaprwire.com/pressrelease/computer-software/20060413196.htm

Also I think it is wrong to think of SAY INFY and WIT as three players “in the same market”. They are becoming main players of the global market, and they are gaining market shares from competitors like IBM, EDS, Accenture… All of them are right now growing very well in China where there is room for everybody. It will be years before they will feel each-others competition as a limit to growth… and when that will happen… stock owners of the company which will be bought out will make more money than owners of the company which will buy.

3. deminvest - January 29, 2007

Nice article about Indian IT services companies are starting to get a share of very large top 100 commercial contracts from the global big six — IBM, Accenture, ACS, CSC, EDS and HP, traditionally known for their stranglehold in this large deal space.

http://economictimes.indiatimes.com/News/News_By_Industry/Infotech/Software/IT_biggies_set_sight_on_global_mega_deals/articleshow/1462853.cms

4. Devyani Bedekar - February 23, 2007

Hey,

Great posts !!!
One quick question. Do you think attrition rate is one of the important evaluation measure for companies such as WIT, INFY, SAY.
Also, do you have any insights as why WIT and INFY are going down for the last 3 days.

Thanks
Devyani

5. deminvest - February 23, 2007

Dear Devyani,

Thank you… only I have to admit… I actually don’t know what the attrition rate is…

So my answer will not be… professional.

But since … nothing on this site is professional and I am myself just a proletarian investor playing with the few money my work lets me earn, I will go to Wikipedia, find out what this very interesting “attrition rate” is then give you a very… unprofessional answer :-).

PS
Your Blog is much more professional than mine. I advice every body who is looking for more reliable information to check it out: http://happyinvestingposts.blogspot.com/

6. deminvest - February 23, 2007

Ok, I am done with my Wikipedia research:

“Attrition Rate” = “Churn rate” = the proportion of contractual customers or subscribers who leave a supplier during a given time period.

This measure is very important for subscriber based businesses like utilities, cable companies or phone companies.

IT companies like SAY, INFY and WIT mainly do win IT contracts. Even a customer which is extremely happy with a delivered project, may not need a new project the next year, so it may look as a customer who has left the supplier.

I would mainly look at Revenue growth of SAY, INFY and WIT as the best measure of their customer satisfaction and ability to attract new customers.

7. deminvest - February 23, 2007

Indian high tech stocks are going down because next week there will be Indian finance Minister P Chidambaram’s annual budget speech.

There is strong fear that further measures to keep Inflation under controll may be announced. Those measures could bring to higher interest rates and to measured which could cool the hot Indian economy

http://news.monstersandcritics.com/business/news/article_1268624.php/Indian_government_committed_to_check_inflation

8. Devyani - February 26, 2007

Great … this helps !!!
Thanks a lot for your research.

Devyani

9. What should I buy in September? Johnson & Johnson JNJ, India Fund IFN, Wipro WIT or Boeing BA? « Democratic Investments by the people for the people - September 7, 2007

[…] is a fast growing Indian Software consulting company. I already decided I wanted to buy Wipro. Now WIT has far better numbers than it used to when I wrote the post linked above. Forward P/E : […]


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