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| Transcript of Chat with Mr. Anil Sarin , Asst. VP-Investment, Birla Sun Life AMC Ltd. and Fund Manager-Birla IT Fund.- 29th April 2002 |
[04:41:58 PM] => Myiris: Welcome to the live chat session Mr Sarin.
[04:42:22 PM] => Myiris: Our guest today is Mr Anil Sarin
[04:43:20 PM] => Myiris: Mr.Anil Sarin, Asst. VP-Investment, Birla Sun Life AMC Ltd. and Fund Manager-Birla IT Fund.At the time of this conversation / chat, Mr.Sarin may or may not have positions in the stocks mentioned below, although holdings may change at any time. The views expressed by Mr.Sarin is based upon information that he considers reliable, but does not represent that it is accurate or complete, and it should not be relied upon as such. Mr.Sarin, his company and its affiliates, officers, directors, partners, and employees may, from time to time, have long or short positions in, buy or sell and deal as principal in the securities, or derivatives thereof, of companies mentioned herein and may take positions inconsistent with the views expressed.
[04:44:00 PM] => None of the information contained herein constitutes, or is intended to constitute a recommendation of any particular security or trading strategy or a determination that any security or trading strategy is suitable for any specific person. To the extent any of the information contained herein may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person. You should consult with and rely upon your own advisors whether and how to use such information in making any investment decision.
[04:45:19 PM] => Lastly the views expressed by Mr.Sarin have no bearing whatsoever with that of IRIS Ltd. IRIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. IRIS especially states that it has no financial liability whatsoever to any user on account of the use of information provided on its website www.myiris.com
[04:47:12 PM] => Myiris: Welcome to the live chat session
[04:48:55 PM] => Sudakshina sinha : IT Companies expect margins to reduce due to pressure on billing rates. What is your outlook regarding the IT sector for FY03, keeping in mind last year's performance?
[04:52:02 PM] => AS: Margins could fall marginally, but will rise in the later part of the year.We have to watch business volumes, which are rising in most of the top notch companies (after falling for a few quarters in some cases). If volumes keep rising for a length of time, billing rates should firm up once excess capacity in the system gets used up.
[04:54:30 PM] => Outlook : companies have given guidance of between 15% to 20% earnings growth, which should translate into share price increases. We have seen a period of rapid rise in share prices,which, to my mind, should give pause to further rise in prices in the short-term.
[05:01:16 PM] => kabra_nsk: After the dividend tax, burden again shifted on MFs. Will people start pouring in funds?
[05:06:11 PM] => AS: Hard to answer, but investors usually respond to rising share prices with more investments. MFs remain an important source of managing wealth, and will become more important as time goes by. International experience suggests rising interest in MFs.
[05:08:55 PM] => Saroj: After burning hands in the IT sector what is the take on this? Please advice.
[05:12:47 PM] => AS: Investment is about the future, which does not necessarily pan out as expected. We have to look at the number and the quality of investment opportunities that are at hand. One of those is IT. Here,gradually improving global economy provides some confidence for the future. Despite a very tough year ending March 2002, operating profit margins of leading companies in this field have not fallen as much as earlier feared. Things should get better towards the later half of FY03, in our view. This should reflect in share prices and valuation multiples.
[05:13:22 PM] => prashant24_s: What Scope do you see in BIRLA GLOBAL ?
[05:13:50 PM] => AS: No Comments
[05:14:29 PM] => pushparajs: Which type of fund will give more return in current scenario debt / equity / gilt ?
[05:17:25 PM] => AS: We should diversify our holdings across many segments,and each segment has useful properties. Proportion of equity can be raised in expectation of better times for equities.
[05:18:00 PM] => gupta_varinder : What will be the fate of visual Info? What is your assessment of visual soft for the long term investor?
[05:18:25 PM] => AS: No comment.
[05:26:05 PM] => pcbank : California software-would you look at it ?
[05:26:23 PM] => AS: No comment
[05:27:57 PM] => Ravindra kaur : What kind of returns can equity funds promise to ensure a better return and which equity funds? Please advise.
[05:32:09 PM] => AS: Forecasting is fraught with difficulty and also entails conflict of interest. Broadly, equity funds should give returns consistent with earnings growth and to that one has to apply the valuation correction factor. This factor takes into account the expectations for the future and the realisation that worst is possibly over. Spread your money over a few equity funds, they should give good returns from the current NAV levels. If you have the risk appetite, invest in a couple of IT funds as well, since they are expected to do well over the next 12-18 months.
[05:33:11 PM] => Mathew_p : What is the secret behind Birla IT Fund's outstanding performance?
[05:33:43 PM] => AS: We remained true to our philosophy of bottom-up stock picking, and buying at a attractive prices. Timely and substantial Investment into second-tier stocks has helped us give good returns. We hope to keep up the pace of identifying new stocks and buying them at reasonable prices. Selling discipline is the second plank of good performance.
[05:36:30 PM] => Suraj Dholakia: What do you think about the present Tech stock valuations?What do the markets indicate-Buy,sell or hold?
[05:37:47 PM] => AS: Selling or holding depends upon your invesment horizon. As a fund, it is hard to keep moving in and out of stocks and make trading gains. In fact trading is not a foolproof method to make money since we cannot hope to be right all the time. Medium-term indicators are pointing towards holding on to your good invesments and getting rid of mistakes.
[05:38:20 PM] => Kumar : What is your view regarding the Market leader-Infosys' Q4 results?
[05:43:37 PM] => AS: Results were quite good under the circumstnces. Despite billing rate pressure, company managed to hold on to operating margins. Business volume grew despite a tough environment. Outlook is promising.
[05:44:29 PM] => Saurab Parikh : The Indian IT services industry have increased outsourcing and growth in new areas of systems integration and business process outsourcing. Why so? What are the returns expected?
[05:47:12 PM] => AS: Indian IT firms have been regularly adding to their portfolio of services,in order to offer greater value to clients who expect a broad range from their vendors. Margins in SI may be slightly lower than what other services currently offer, but longer term benefits are quite large. BPO is a large opportunity and returns vary across the specturm of services within this sector. Even in BPO operating margins wuold be lower than other segments currently have.
[05:49:34 PM] => Roopa Trivedi : What is your view regarding companies like Infosys, Visualsoft entering the BPO business? What are the margins? What would be the growth?
[05:50:40 PM] => AS: Already answered
[05:51:52 PM] => Swetha desouza : With NIIT planning to get into the transport vertical, what kind of growth can be expected of the company?
[05:52:45 PM] => AS: No comment on individual companies.
[05:56:31 PM] => chandrashekharan: What made you include HCL infosystems and visualsoft technology in the Birla IT fund in March,2002? Also pl.comment on the high exposure to e-serve international and infotech in the fund.
[05:57:43 PM] => AS: I cannot comment on indivdual scrips in a public forum. Broadly, these companies should experience faster earnings growth in the coming years. This is based on changes in business model, entry into newer, more profitable segments and also due to changing fundamentals of existing business.
[05:59:30 PM] => E-serve and Infotech represent players operaing in the promising segment of IT enabled services and BPO. Their revenue growth and profitablity inspires confidence.The Market that they are operating in is largely untapped and there is good scope to grow. We purchased these shares at quite attractive valuations.
[06:00:42 PM] => rvinodhini: Should I hold Kodak, Rallis or book profit? They are already 60 per cent above my cost.
[06:01:04 PM] => AS: No comment
[06:01:18 PM] => pushparajs: Is TV 18 worth buy at this stage ?
[06:01:36 PM] => AS: No comment
[06:01:58 PM] => Ajay varma: Which is the most undervalued IT company right now? Why?
[06:02:36 PM] => AS: No comment. I cannot offer investment advice of this nature from this forum.
[06:03:02 PM] => Kulkarni: Which sector funds, other than IT, are likely to perform well this year ?
[06:03:37 PM] => AS: I can comment that pharmaceuticals (especially MNC pharma) should do well during this year. Sector funds are harder to recommend.
[06:05:14 PM] => samira :There has been considerable momentum in second rung IT stocks of late. What could be the reasons?
[06:07:43 PM] => AS: There was extreme undervaluation based loosely on the theme " second tier companies will die in the process of consolidation". That has got corrected. Second tier stocks are showing faster growth rate than their larger cousins, and investors are paying for growth. Some of these comapanies were already operating at low margins so improving revenue is leading to better margins (top-tier comapnies were operating at higher margins and are experiencing slightly falling margins). Lastly, this rally is dominated by local investors who have the time to focus on smaller and more illiquid invesment ideas (something the FIIs lacked). Hence the willingness to pay for smaller stocks.
[06:08:27 PM] => ckrab : What do you think about Maharashtra scooters? Please give your valuable suggestion.
[06:09:28 PM] => AS: No comment
[06:10:04 PM] => Kruthika Desai: Can technology investments prove to be a good long-term bet? What movements have the IT sector funds seen post budget?
[06:11:42 PM] => AS: IT stocks are India's only indsutry that enjoys global cost advantage.Technology is only rising in complexity, so demand for the medium term is not an issue. Indian IT comapnies are not capital intensive, hence can grow rapidly without fresh injections of cash. They are valued more or less in line (or even cheaper) thatn their medium-term growth rates, so valuation is a risk at this stage.
[06:12:02 PM] => Birla IT fund has grown nearly 19 percent since the budget day.
[06:12:24 PM] => sabha Treasurywala: What would be the safest equity sector to bet on in the current scenario?
[06:14:24 PM] => AS: Diversified funds are the safest.
[06:16:44 PM] => Myiris : That�s the end of the chat session for today
[06:17:00 PM] => Myiris : We thank you all for logging on
[06:19:02 PM] => Myiris : Our thanks to Mr Sarin for sparing time to come on the chat session.
[06:21:50 PM] => Myiris: Due to limitation of time,a few questions have not been answered.We would try to put up the answers in the chat transcript,which would be available on Myiris.com later.
[06:22:13 PM] => Myiris : We�ll bring you more on Myiris chat masala
[06:22:29 PM] => Myiris : Till then its bye from us
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