TCS to announce Q4 earnings tomorrow. Here's what to expect

 The company's stock will be in focus as well following the earnings. In the quarter, TCS is expected to record improvement in operating margins, while some cross-currency headwinds.

IT-giant, Tata Consultancy Services (TCS) is set to announce its financial performance for the quarter ending March 2022 (Q4FY22) period. The company's stock will be in focus as well following the earnings. In the quarter, TCS is expected to record improvement in operating margins, while some cross-currency headwinds.

Last week, on Friday, TCS shares held steady and ended at ₹3686.85 apiece marginally up from the previous closing on BSE. At the closing stock price, TCS market valuation stood at over ₹13.49 lakh crore.

In the previous week, TCS shares have broadly tumbled nearly 2% as focus shifts on the fourth quarterly and year-end performance for the fiscal FY22.

For TCS' fourth quarter, Manik Taneja and Dimel Francis analysts at JM Financial said, "We are building in a 3.5% QoQ c/c growth with ~60 bps cross-currency headwinds. Expect EBIT margins to improve slightly by 20 bps QoQ to 25.2% aided by growth leverage and slight INR depreciation."

Key things to watch out for, as per JM Financial's analysts are - CY22/FY23 client spending outlook; margin performance and outlook especially given the likely resumption in travel and supply-side pressures; and outlook on pricing.

JM Financial analysts expect TCS revenue at $6,712 million with a growth of 12% yoy and 2.9% qoq. In rupee terms, the revenue is expected at ₹50,676.2 crore rising by 16% yoy and 3.7% qoq. Meanwhile, net profit is seen at ₹10.065,6 crore up by 8.9% yoy and 3% qoq. As for EBIT, it is seen at ₹12,766.6 crore higher by 8.8% yoy and 4.3% qoq. EBIT margin is forecasted at 25.2% contracting by 170 basis points yoy but improving by 20 basis points on qoq.

On TCS shares outlook, the JM Financial analysts give a 'Hold' recommendation with a target price of ₹4,100 apiece.

On BSE, TCS has clocked a 52-week high of ₹4,045.50 apiece currently.

During Q3FY22, TCS posted a 12.3% yoy growth in consolidated net profit to ₹9,769 crore with a net margin of 20%. Consolidated revenue jumped 16.3% yoy to ₹48,885 crore. Constant currency revenue growth was at 15.4% yoy.

In the December 2021 quarter, TCS all verticals grew in the mid to high teens. Growth was led by Retail and CPG (20.4%), BFSI (+17.9%), and the Manufacturing vertical (+18.3%). Technology & Services grew +17.7%, Life Sciences and Healthcare grew +16.3% and Communications & Media grew +14.4%.

Also, TCS had crossed a new milestone in Q3 with the number of women in its workforce crossing 2 lakh. TCS added 28,238 employees on a net basis, taking the total number of employees to 556,986 as of December 31, 2021. IT Services attrition rate (LTM) in Q3 was 15.3%.

Dolly Khanna adds these two multibagger stocks in her portfolio in Q4FY22

 Dolly Khanna portfolio: According to shareholding pattern of Sharda Cropchem for recently ended March 2022 quarter, ace investor holds 12,43,710 shares or 1.38 per cent stake in the company

Dolly Khanna portfolio: Chennai-based ace investor has added two new multibagger stocks in her portfolio. Those two new Dolly Khyanna shares are Sharda Cropchem and Khaitan Chemicals. In Q4FY22, Dolly Khanna has bought 1.02 per cent stake in Khaitan Chemicals whereas she bought 1.38 per cent stake in Sharda Cropchem company. 

This stock market news became public when marquee investor's name appeared in the list of individual shareholders of these companies, who hold 1 per cent or more stake in these companies whereas in December 2021 shareholding pattern, her name was missing from the list.

According to shareholding pattern of Sharda Cropchem for recently ended March 2022 quarter, Dolly Khanna's name appears in the list of individual shareholders of the company who own 1 per cent or more stake in the company. The Chennai-based investor holds 12,43,710 shares, which is around 1.38 per cent of total paid-up capital of the company.

Dolly Khanna holding in Khaitan Chemicals

As per shareholding pattern of the company, Dolly Khanna's name appears for the first time in the list of company's shareholders, who own 1 per cent or more stake in this chemical company. Dolly Khanna shareholding in the company is 9,89,591 shares or 1.02 per cent stake in the company.

As per the share price history of both new Dolly Khanna shares, both are multibagger stocks. In last one year, Sharda Cropchem share price has appreciated near 150 per cent whereas Khaitan Chemicals share price has appreciated more than 500 per cent in last one year. In year-to-date time, Khaitan Chemicals share price has shot up near 110 per cent whereas Sharda Cropchem shares have surged almost 100 per cent in YTD time.

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Authorisation letter for passport

 

Authorization Letter for Passport 

From, Wilma Pace Ap #676-6532 Odio Rd. Darlington CO 06963 (926) 709-3295 

Date: 09-01-2019 

To, Vielka Nielsen Ap #517-7326 Eletnentum Rd. Fon Smith North Dakota 79637 

Subject: Authorization Note to submit a passport application letter 

Dear Vielka Nielsen, 

I, Wiltna Pace resident of [Writer, Address] hereby authorize [Name of the person being authorized] who is my [relation with the writer] to submit my doctunents and application form to your office as I am personally tillable to submit the same because [reason for not submitting yourself]. Also, [None of the person being authorized], signature is provided and attested below for verification purposes. 

[Proxy, Signature] - Sincerely, [Signature of the writer] Wilma Pace 

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How Pfizer's $6.7 Billion Arena Pharmaceuticals Buyout Could Work for Investors

 

KEY POINTS

• Pfizer recently completed a $6.7 billion acquisition of Arena Pharmaceuticals.
• Pfizer bought Arena Pharmaceuticals to access Etrasimod, an experimental anti-inflammation drug for the treatment of ulcerative colitis and multiple sclerosis.
• To inspire Pfizer's buyout, Etrasimod probably looked like a more effective treatment option in phase 3 clinical trial results that haven't been shared publicly yet.

Here's why America's largest pharmaceutical company splashed out on an experimental treatment you've probably never heard of.

Did you know that Pfizer ( PFE 0.36% ) makes more than just a COVID-19 vaccine? Comirnaty gets so much attention that it would be easy to forget that it wasn't always a Pfizer vaccine.

Pfizer markets Comirnaty in collaboration with BioNTech ( BNTX -5.46% ), a relatively small biotechnology company that, at the beginning of the pandemic, lacked the resources to rapidly develop a new vaccine. This isn't unusual. The vast majority of top-selling products from Pfizer, and every other big pharmaceutical company, have external origins.

NYSE: PFE

Pfizer Inc.

Today's Change

(0.36%) US$0.19

Current Price

US$52.78

KEY DATA POINTS

Market Cap

$297B

Day's Range

US$52.51 - US$53.25

52wk Range

US$35.64 - US$61.71

Volume

17,435,470

Avg Vol

32,887,665

P/E (ttm)

13.45

Licensing a successful drug is all fine and good, but it's usually more lucrative to own the whole thing. To this end, Pfizer recently completed a $6.7 billion acquisition of Arena Pharmaceuticals for complete access to Etrasimod, an experimental anti-inflammation drug for people with ulcerative colitis and other autoimmune disorders.

Etrasimod isn't going to outperform Pfizer's COVID-related products, but this acquisition could be very beneficial for shareholders. Here's why.

Etrasimod could be a blockbuster

On March 23, 2022, Pfizer told investors that Etrasimod met the main goal in a phase 3 trial with ulcerative colitis patients. After 12 weeks of treatment, a significantly higher percentage of patients randomized to receive Etrasimod achieved clinical remission compared to the placebo group. Pfizer's saving the juicy details for an upcoming scientific conference, but they're probably bad news for a similar drug from Bristol Myers Squibb ( BMY 1.20% ) called Zeposia.

Last May, the FDA approved Zeposia to treat ulcerative colitis patients, an indication expected to generate around $1.4 billion in sales for Bristol Myers by 2026. Zeposia is a capsule that works the same way as Etrasimod to prevent unnecessary inflammation that earned approval to treat multiple sclerosis in 2020. In a pivotal trial leading to its approval for ulcerative colitis, Zeposia helped 18% of patients achieve clinical remission after 10 weeks of treatment compared to 6% of patients given a placebo.

Image source: Getty Images.

Etrasimod modulates the same sphingosine 1-phosphate (SNP1) receptors that Zeposia acts on, and I wouldn't be surprised to learn it's significantly more effective. Pfizer didn't make its final bid for Arena Pharmaceuticals until it saw phase 3 ulcerative colitis data, which was months after Bristol Myers began marketing Zeposia to ulcerative colitis patients.

Zeposia earned its first FDA approval in 2020 as a new treatment for multiple sclerosis (MS). Etrasimod will probably earn more as an ulcerative colitis treatment, but an eventual MS indication could add more than $1 billion to overall Etrasimod sales down the road.

What to look for next

By the end of March, Pfizer expects to report results from a 52-week study with ulcerative colitis patients and Etrasimod. After a year of treatment, 37% of patients given Zeposia achieved remission, which was 19% better than patients who received a placebo.

There will be some ins and outs to sort through, but investors want to keep an eye open for a treatment difference of at least 20% compared to placebo when Pfizer reads out 52-week results. If Etrasimod clearly outperforms Zeposia it could begin adding revenue to Pfizer's top line in 2023.

In 2021, Pfizer manufactured over 3 billion doses of Comirnaty, and it's producing an antiviral treatment for COVID-19 called Paxlovid at a hair-raising pace. In February, the company told investors to expect $54 billion in combined sales of Paxlovid and Comirnaty in 2022. That works out to around half of management's estimate for total revenue this year.

Record-breaking sales of Paxlovid and Comirnaty certainly overshadow the company's Arena Pharmaceuticals acquisition. The important takeaway for individual investors is that making smart deals like the one it made for Arena is the only way Pfizer can continue growing after high demand for Paxlovid and Comirnaty subsides.

1 Green Flag for Take-Two Interactive, and 1 Red Flag

 

Fading tailwinds from folks staying home should be offset by easing supply-chain constraints.

Video-game developer Take-Two Interactive ( TTWO 2.66% ) is in the middle of a potentially volatile period for the business. The tailwinds that helped boost sales during the COVID-19 pandemic when the world's population demanded more in-home entertainment are fading away. 

Meanwhile, the industry is undergoing a significant upgrade of its gaming technology. Next-generation gaming consoles have been launched by the two primary providers, Sony and Microsoft. Let's look closer at the one red flag and one green flag for Take-Two Interactive. 

Image source: Getty Images.

The red flag: Economic reopening 

Take-Two Interactive derives a large part of its revenue and profits from content that people play at home. It's no surprise then that the business would experience a boost during the pandemic when hundreds of millions of people were forced to entertain themselves at home.

Indeed, sales increased by 15.8% in 2020. Typically, revenue increases are reserved for years when the company has a hit gaming title release.

With limited game launches in 2021 and momentum in economic reopening, Take-Two's revenue growth slowed to 9.2% for the year. With a strengthening arsenal in the battle against COVID-19, governments are opting to cautiously remove business restrictions. The trend will be a headwind to Take-Two Interactive which will, even more so, depend on hit titles to generate revenue.

NASDAQ: TTWO

Take-Two Interactive Software, Inc.

Today's Change

(2.66%) US$4.00

Current Price

US$154.50

KEY DATA POINTS

Market Cap

$17B

Day's Range

US$148.51 - US$154.54

52wk Range

US$133.54 - US$195.82

Volume

1,588,968

Avg Vol

2,106,322

P/E (ttm)

33.92

The green flag: Easing supply-chain constraints 

As mentioned earlier, Sony launched the next iteration of its popular gaming console, the PlayStation 5, in 2020. Similarly, Microsoft launched the next-generation Xbox gaming console. Interestingly, Take-Two Interactive sells games for personal computers, mobile devices, and the aforementioned consoles. However, console game sales comprised 74.6% of its overall revenue in its fiscal 2021 year (ended March 31, 2021).

This segment from the company's 2021 annual report highlights the impact:

During console transitions, we may simultaneously incur costs both in continuing to develop and market new titles for prior-generation video game platforms, which may not sell at premium prices, and also in developing products for next-generation platforms, which may not generate immediate or near-term revenues. As a result, our business and operating results may be more volatile and difficult to predict during console transitions than during other times.

In other words, costs for the company increase while consumers decrease purchases and wait to upgrade to the new gaming systems.

To make matters worse, the coronavirus pandemic clogged supply chains worldwide, leading to shortages in supplies of these new gaming systems. Two years after launching, Sony's PlayStation 5 remains sold out at major retailers, and Microsoft's Xbox also has limited availability. 

The good news is that supply-chain constraints are easing. Fewer folks are getting severely ill with COVID-19, and when there are outbreaks, the mandatory quarantine requirements are less demanding. That should result in more output of the next-generation gaming consoles and subsequently consumer adoption and purchases in games for the new systems. 

The tailwind from easing supply chains should outweigh the headwind from people leaving their homes more often. Still, Take-Two's stock is not cheap, trading at a price-to-free cash flow ratio of 50.9, significantly higher than its peers. Investors appear to be pricing in excellent prospects for Take-Two Interactive.