MARKET UPDATE
| IT services firms may post muted growth in Jul-Sept, say experts Mon, 08 Oct 2012 01:06:01 +0530 |
| Business Standard Economy Policy News The July-September quarter, which is traditionally a strong one for software services companies, may be muted on slower growth in discretionary spends and continued delays in spending decisions, analysts have said. Market experts expect companies to report a sequential revenue growth of about four per cent, driven by volumes and the depreciation in rupee. “This will be relatively muted for a quarter, which is considered to be the best for the Indian information technology companies (July-September period). Slower growth in discretionary spends and continued delays in spending decisions have likely continued to impede revenue growth, we believe,” Kotak Securities Head (Private Client Group Research) Dipen Shah said. The cross-currency volatility impact is expected to be smaller, though negative, for the quarter, he added. Infosys will kick-off the earnings season with its quarterly results announcement on October 12. While TCS and Wipro are yet to announce their dates, HCL Technologies will make its numbers public on October 17. The rupee depreciated sharply to the US dollar in the April-June quarter, but it had appreciated in the July- September quarter. Also, the full impact of salary hikes given by several companies in the previous quarter would be seen in the July-September quarter. “Revenue growth would be largely volume-driven with positive impact of cross currency movement... Margin tailwinds from fresh hirings and absence of US visa costs to be partly offset by wage hike and investments,” IDFC Securities said in its Q2 Earnings Preview. TCS is expected to lead the Tier-I pack with 4.3 per cent quarter-on-quarter dollar revenue growth, while Infosys is also likely to see a good quarter with 4.1 per cent quarter-on-quarter revenue growth, Kotak Institutional Equities said in its quarterly technology report. Wipro is likely to report a weak quarter and Tier-II companies are likely to under-perform Tier-I IT players, it added. “Infosys has stopped giving quarterly guidance. We expect the company to increase the annual revenue guidance marginally, because of the Lodestone acquisition. However, with continuing uncertainty on pending decisions (largely discretionary spends), the company may remain conservative while giving the annual organic growth guidance,” Shah said. Quarterly variations in some companies would also impact the overall picture, he added. |
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