Modest IT Revenue Growth on the Cards

Published: 15th April 2016 05:08 AM  |   Last Updated: 15th April 2016 05:08 AM   |  A+A-

CHENNAI: Infosys’ results on Friday is expected to set the trend to the flurry of IT services results for the quarter ended March 31. Analysts expect the Indian IT services majors to clock modest sequential revenue growth during the quarter.

They  also point that headwinds from depreciation of the British pound (GBP) and other cross-currency movements may negatively impact US dollar revenues by 30-50 basis points. Infosys’ results will be followed by Tata Consultancy Services and Mindtree (April 18), Wipro (April 20), Cyient (April 21) and Persistent (April 23).

The revenue growth will be welcome news for firms, since the last quarter had seen revenues fall for most majors due to the disruption caused by the Chennai Floods. According to a Kotak Institutional Equities report, margins will improve for most companies and the 2 per cent depreciation in the rupee will also help.

“Portfolio of clients and the ability to participate in digital(projects) will significantly influence growth of IT companies in the current fiscal,” the firm added.

Meanwhile, Emkay Equity Research said investors would also watch out for the outlook on business from Europe, as growth from the region has been declining recently.

Infosys results Outlook Positive

Infosys, which reported a consolidated a net profit of Rs.3,465 crore growing at 6.61% year-on-year (y-o-y) during Q3, is expected to beat the Nasscom guidance and grow at 11-13% y-o-y, according to broking firm Jefferies. However, brokerage house Religare Institutional Research expects revenues to come in at the upper end of its FY16 dollar revenue guidance of 8.9-9.3% y-o-y

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