IT’s Big 5 Expected to Report Better Numbers in Re Terms
Dollar-denominated revenue and profit growth is, however, seen tepid at 1-2%, according to average estimate of 6 brokerages and ETIG
Technologies, and Tech Mahindra.
The sequential growth in the dollardenominatedrevenuesisexpectedtobe tepid at 1-2% considering the seasonal weakness in the demand as clients of these companies finalise IT budgets for the year, and unfavourable cross currency movements. Thepoundfell5.5%on average against the dollar in the March 2016 quarter on a sequential basis. When IT players translate revenue in pounds into dollars for reporting purpose, they take a hit in realisation due to pound’s weakness.
The operating margin is expected to stay more or less stable at 23.1% compared to 23.3% in the December quarter.
Gartner, a technology research firm, last week reduced the growth forecast for IT services to 2.1% from its earlier
Analysts expect Infosys to guide for 1012% revenue growth in the dollar terms for FY17
estimate of 3.1% increase for 2016. Against the backdrop, the management commentary of IT exporters during the results will be critical.
Analysts expect Infosys to guide for 10-12% revenue growth in the dollar termsforFY17.TCShasbeenreporting lowerthanexpectedgrowthforthepast few quarters. Its outlook on employee addition and momentum in signing new large contracts will help in shaping up the future growth expectations.
Source: Estimates by brokerages and ETIG