The Hindu Business Line : iGate flags off with good numbers

With the results season starting off, one sector that will be watched keenly is IT services. iGate Global Solutions has flagged off the earnings season by announcing reasonable third quarter numbers.

Revenues for the December quarter have grown by a modest 4.2 per cent to Rs 209.3 crore on a sequential basis. Operating profits and net profits have registered an impressive 15.8 per cent and 26.4 per cent growth to Rs 30.3 crore and Rs 29 crore respectively during the same period.

BFSI Segment

The strong numbers alleviate concerns (to some extent) about slowdown in the US economy, particularly the BFSI segment, as it happens to be the focus area for iGate.

Tier II IT stocks have pummelled in the last six months mostly due to apprehensions about the US economy. iGate, which may soon de-list from the exchanges, may attract limited investors’ interest.

iGate’s results may be considered as a valid indicator of the BFSI scenario, as the company services mostly to these clients. The company also has a mortgage exposure and derives most of its revenues from clients in the US.

Revenue driver

More clarity on the US scenario may emerge only by June. Volume based services such as application development and maintenance, the prominent revenue driver for most IT services companies, may be largely unaffected. It is discretionary spending on IT that is expected to be affected by any potential slowdown.

More clarity on the US scenario can be expected only after more companies start announcing their results over the next couple of weeks.