IT Sec­tor Q4 Earn­ings Dis­ap­point, In­fosys Seems to be Back on Track

The Economic Times - - Smart -

ET In­tel­li­gence Group: It was sort of a quar­ter of dis­con­tent for in­vestors track­ing the top IT com­pa­nies. Ma­jor­ity of soft­ware ex­porters re­ported lower-than-ex­pected num­bers. Bar­ring In­fosys, other firms in­clud­ing Tata Con­sult­ing Ser­vices (TCS), Wipro, and HCL Tech suf­fered a drop in stock prices af­ter declar­ing the March 2016 quar­ter per­for­mance. The next two quar­ters will be cru­cial since they have his­tor­i­cally shown bet­ter busi­ness mo­men­tum.

In­fosys, the coun­try’s sec­ond-largest IT ex­porter, ap­pears to be back on the growth track. The growth in its rev­enue in 12 months to March 2016 at 9.1% was higher than the rest of the three. This was for the first time in at least seven years. In ad­di­tion, In­fosys has guided for above in­dus­try rev­enue growth.

TCS, the coun­try’s largest soft­ware ex­porter, re­ported the slow­est growth of 7.1% in a 12-month pe­riod in 22 quar­ters.

Wipro, the third-largest player, is cau­tious about fu­ture growth. It ex- pects dol­lar-de­nom­i­nated rev­enue to grow by 1-3% in con­stant cur­rency. HCL Tech hopes that growth will re­sume in the June quar­ter given a strong deal flow. It signed seven large deals with to­tal con­tract value of over $2bil­lion. Thisof­fersa­bet­ter­rev­enue vis­i­bil­ity in the com­ing quar­ters.

TCS and In­fosys, too, have shown trac­tion in new wins.

June and Septem­ber quar­ters have his­tor­i­cally shown bet­ter growth for top IT pack. Con­sid­er­ing the strong deals flow for th­ese com­pa­nies, the growth may pick up in the first half of the fis­cal end­ing March 2017. The stock val­u­a­tions of th­ese com­pa­nies, ex­cept In­fosys, are un­der pres­sure over the past few months. A re­ver­sal in the trend of slow growth is cru­cial for a turn­around in val­u­a­tions.


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