Abhinav Sharma

How Do India's Rising Wages Affect Its IT Outsourcing Companies?

If you see another trend, the average experience of the employee would be coming down as well. So while the average salary per employee for Infy would have gone frm 27k to 24k USD, the average experience drop would have been much more severe. Come to think of it, Infy had around 35k employees around this time in 2004 and now they are more than 70k. Most of the additions have happened in the fresher segment and therefore, the case for wage inflation still holds true.

ICICI Bank Limited: A Clear Buy

and I am not at all commenting on ICICI Bank as such! If ICICI Holdings is like this, ICICI Bank would be consisting of such units only!

ICICI Bank Limited: A Clear Buy

The break up of the 40k crores ($10 bn) that the value of ICICI Holdings is supposed to become:

1) ICICI Prudential Life Insurance - 74% stake valued at $6 billion, value of firm around $8 billion. Company has been making losses since the very beginning (around $150 million for FY07). Compared to that, Bajaj Allianz has a profit of $15 million. Most of the money is flowing in through unit linked and equity schemes which is totally dependent on the equity market movement. Result: a drop in broader market means losses on equity schemes plus lower inflows and subsequently, lower value of the firm.

2) ICICI Lombard General Insurance - 74% stake valued at $3 billion, value of firm around $4 billion. Has an equity capital of Rs. 350 crores right now. Now, this company had insurance premium of Rs. 3k crores. The entire market for general insurance is Rs. 25k crores (12% market share). It may be capped at 25% market share in 4 years' time, and assuming market size to double its premium would be Rs. 12.5k crores. Current net worth is less than Rs. 1k crores. There has been underwriting losses since inception and the only source of profitability has been its investment books. Now, are you guys really sure this company could be worth Rs. 16500 crores???

3) ICICI Prudential Asset Management Company - 55% stake valued at $1 billion, which means value of firm to be around $1.8 billion. Assets under management are around $10 billion, which means you are paying 18% of AUM as the valuation of this company.

How long would you be willing to wait till you actually seek alpha in ICICI Holdings.
I rest my case.
comments are invited from anyone who feels so bullish on India.

The Surprising Shortage Of Quality Global Labor

Infosys is hiring 2% because their requirement is 26,000 and they are able to take on that many considering they have utilization of around 70%.

I agree that opportunity is not an issue in the global scenario now, meeting that opportunity is key.

HDFC Managing Director Significantly Increases His Stake in the Company

according to National Stock Exchange announcements, this 85k shares are from an ESOP plan!

Who's Responsible for the Indian Stock Bubble?

Momentum based buying results in a different psychology.
Suppose I am a foreign institutional investor currently invested in US only. I realize that India and other emerging markets are the next big thing. However, the emerging markets have already moved up substantially in the last few months. While I am not entirely happy with the valuations in India, I believe that even from these levels it would continue moving up. I do not want to miss out on the India story. As a result, I get to enter the market when it has already run up quite a bit. My trading in the market sends signals to other prospective investors who have funds waiting to be deployed. And then he would invest to further raise the valuations. This is nothing but a vicious circle!

The valuations even now are quite on the higher side. When we dropped down in May, everyone was saying market is overheated. Now, we are close to those levels once again and it may not be far when the funds start pulling out of an expensive growth story once again!