Info-tech

IT biggies may log modest revenue growth in Q3

Our Bureau Mumbai | Updated on November 23, 2017 Published on January 07, 2014

Fewer working days, furloughs seen as dampeners

Infosys may kick off the third quarter earnings season on an optimistic note as analysts expect the company to up its full-year guidance for the second time in four months.

Buoyed by the return of co-founder N.R. Narayana Murthy and growing demand for software services globally, the company is set to raise its full-year revenue growth forecast to 11-12 per cent from 9-10 per cent earlier, according to leading brokerage firms.

Murthy effect

“The return of Murthy to Infosys has raised hopes on the medium-to-long-term prospects of the company. Based on our expected revenues in the third quarter, we expect the company to increase the guidance range,” Dipen Shah, Head-Private Client Group Research, Kotak Securities, said in a research report.

However, Q3 earnings may be modest for Infosys and its rivals Tata Consultancy Services, Wipro and HCL Technologies largely due to the holiday season and furloughs in most western markets. A furlough is a temporary lay-off of some employees.

“We think TCS and HCL Tech will point to a healthy demand environment, while Wipro and Infosys will remain cautiously positive,” JP Morgan analysts Viju George and Amit Sharma, said in a research report.

According to consensus estimates of leading brokerages, the top four IT companies are expected to report revenue growth of between two and four per cent in rupee terms on a sequential basis.

Rupee value

However, the rupee appreciation of 1.3 per cent vis-à-vis the dollar may compel these companies, with the exception of TCS, to report forex losses, thereby impacting their profits.

Profits are likely to show a mixed trend. Indian companies earn a lion’s share of their revenues in dollars and, hence, any rupee uptick tells on their margins and profits.

IDBI Capital, in a research report, suggests that Infosys, Wipro, HCL Tech and Tech Mahindra may report forex losses ranging between Rs 52 crore and Rs 218 crore.

On the other hand, the TCS management had indicated to analysts in December that the company could record a forex gain of about Rs 150 crore largely due to its exposure to ‘range forward options,’ a forex contract that uses a range of exchange rates rather than a single rate.

More than the Q3 numbers, analysts are keen to know management views on how 2014 would shape up for the $108-billion IT industry. “Company management views on translation of US macro improvements into better US demand, especially in discretionary spend areas, would be keenly watched,” said a note from Nomura Equity Research.

>adith.charlie@thehindu.co.in

Published on January 07, 2014

A letter from the Editor


Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism
null
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.