After a slower growth in the previous quarter, top-tier IT players are expected to show a strong traction for the September quarter of 2011.
According to the aggregate of broking firms estimates and ETIG's forecast, aggregate net sales of the top four IT players will grow sequentially by 5.5% for the September quarter against 4% in the past quarter. Net profit will grow by 4.1%, a tad faster than 3.8% in the June quarter.
The sample includes TCS, Infosys, Wipro and HCL Tech. Sustained outsourcing demand, absence of salary hikes and the benefit from a weak rupee at the end of the September quarter will be the major drivers of growth. Business volumes measured in terms of billed man-hours for the quarter, are likely to improve 4-8% for the top players.
Among the top players which are listed in India, TCS and HCL Tech are in a better position to take advantage of the rapidly changing demand landscape. TCS is likely to grow its dollar-denominated revenue by 7.5% sequentially, whereas it could be a 6% increase for HCL Tech.
In comparison, Wipro and Infosys, which have recently undertaken a restructuring of their top decks, may take a few more quarters to record a significant improvement in performance. Infosys is expected to report a 5% revenue growth in dollar terms while Wipro's IT sales are likely to grow at 3%, the slowest among peers.
In the absence of fresh salary hikes during the September quarter and a 2.4% rupee depreciation against the dollar, IT exporters including TCS and Infosys are expected to report a marginal improvement in their operating margins.
Analysts in Nomura Equity Research believe that Infosys would be in a better position to deliver margin improvement due to its lower hedging levels. Infosys hedges over two quarters of its revenue compared to TCS, which takes on contracts that last for more than a year.
Another factor that may weigh on TCS's margin will be its annual exercise to promote its deserving executives. This may shave off 70-80 bps from TCS's margin, according to Nomura. The aggregate estimates suggest the operating margin for TCS would grow 200 bps sequentially and 254 bps for Infosys. Wipro and HCL Tech are likely to report a drop of 50 bps and 130 bps in margins, respectively.
niraj kumar
pgdm. 3rd.sem
According to the aggregate of broking firms estimates and ETIG's forecast, aggregate net sales of the top four IT players will grow sequentially by 5.5% for the September quarter against 4% in the past quarter. Net profit will grow by 4.1%, a tad faster than 3.8% in the June quarter.
The sample includes TCS, Infosys, Wipro and HCL Tech. Sustained outsourcing demand, absence of salary hikes and the benefit from a weak rupee at the end of the September quarter will be the major drivers of growth. Business volumes measured in terms of billed man-hours for the quarter, are likely to improve 4-8% for the top players.
Among the top players which are listed in India, TCS and HCL Tech are in a better position to take advantage of the rapidly changing demand landscape. TCS is likely to grow its dollar-denominated revenue by 7.5% sequentially, whereas it could be a 6% increase for HCL Tech.
In comparison, Wipro and Infosys, which have recently undertaken a restructuring of their top decks, may take a few more quarters to record a significant improvement in performance. Infosys is expected to report a 5% revenue growth in dollar terms while Wipro's IT sales are likely to grow at 3%, the slowest among peers.
In the absence of fresh salary hikes during the September quarter and a 2.4% rupee depreciation against the dollar, IT exporters including TCS and Infosys are expected to report a marginal improvement in their operating margins.
Analysts in Nomura Equity Research believe that Infosys would be in a better position to deliver margin improvement due to its lower hedging levels. Infosys hedges over two quarters of its revenue compared to TCS, which takes on contracts that last for more than a year.
Another factor that may weigh on TCS's margin will be its annual exercise to promote its deserving executives. This may shave off 70-80 bps from TCS's margin, according to Nomura. The aggregate estimates suggest the operating margin for TCS would grow 200 bps sequentially and 254 bps for Infosys. Wipro and HCL Tech are likely to report a drop of 50 bps and 130 bps in margins, respectively.
niraj kumar
pgdm. 3rd.sem
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