IT earnings preview
Given the robust demand environment, the front-line information technology (IT) services companies are expected to maintain the growth momentum in Q2FY2007 also. We expect the volumes to grow in the range of 6.5-10% sequentially for the quarter. The depreciation of the rupee would further aid the overall growth in the revenues (based on the average exchange rate during the quarter). However, the impact of the exchange rate fluctuation is likely to be lower in Q2. Especially in terms of the translation gains (that means lower other income), as the end of the period exchange rate was more or less stable as compared to Q1.
Orient Paper and Industries
Cluster: Vulture's Pick
Price target: Rs800
Current market price: Rs612
Orient Paper to raise Rs175 crore
Orient Paper & Industries at its board meeting today has decided to raise Rs175 crore through a rights issue. The proceeds of the rights issue will be utilised towards the expansion of its cement capacity by one million tonne to 3.4 million tonne, enhancing its tissue paper capacity by 20,000 tonne, setting up of a captive power plant (CPP) and repayment of debt. The current issue size is in contrary to our earlier estimate of Rs100 crore, as the company had earlier planned to raise the cement capacity to 3 million tonne as against 3.4 million tonne as per the current plan.