IT top guns may report slower growth in Q3

Most Players Expect $-Denominated Revenues To Remain Flat In Dec Quarter

 GOING by the guidance of a some of the country's top IT exporters, the quarter ending December 31, 2008 will be one of the toughest quarters the sector has witnessed in recent times. Most companies expect either flat growth, or a decline in dollar-denominated sales and profits.
    Infosys Technologies, the country's second biggest IT exporter, expects a mere 0.3% jump in its dollar revenue to $1.2 billion for the quarter as compared with the preceding threemonth period. It expects its earnings per share to grow by 1.8% to $0.57.
    Satyam Computer Services, the fourth biggest, estimates its dollar revenue to rise by 2.2% to $651.9 million. However, the EPS is likely to shrink by as much as 7.9% sequentially.
    Among other top companies, Wipro has given a guidance of near flat revenue in the next quarter, while Patni Computer Systems expects a substantial fall in sales and profit after tax (PAT) on a sequential, or quarteron-quarter, basis.
    The conservative guidance by these companies can be attributed to the global economic turmoil and fluctuations in the currency market.
    "There is a question mark over the growth of IT companies. In this situation, I don't see a recovery until the US credit crisis bottoms out," a senior IT analyst with a local brokerage says. The picture looks grim even for the rest of year (FY09). Both Infosys and Satyam have revised their fullyear revenue guidance downwards. Infosys' revised revenue guidance is about 4.8% lower than earlier, indicating greater uncertainty in the demand environment.
    Satyam, too, has reduced its revenue guidance by 3.7% despite having lower exposure to banking and financial service clients.
    "A lot of companies across the BFSI sector have run into trouble over the last few weeks. This will definitely affect the individual performance of IT companies going ahead, though the extent of the impact will vary," says Mr Rajiv Mehta, IT analyst, India Infoline.
    However, during the September 2008 quarter, nearly all the top-five IT firms beat their quarterly sales and net profit estimates aided by a falling rupee. "Most companies have delivered good results," Mr Mehta says. Even though the world is collapsing, IT companies are showing at least 15-20% growth for FY09, the analyst adds.
    The aggregate sales of the top-five firms rose by 9.3% sequentially and 32.4% on a year-on-year basis to Rs 24,067 crore as against the consensus estimates, which pegged it at Rs 23,652 crore for the September quarter. The aggregate net profit for the top-five firms also grew by 10.2% sequentially to Rs 4,618.4 as compared with a projected rise of 8.6%. Barring TCS, which reported a drop in PAT due to hedging losses and provisioning for doubtful debts, all other firms posted better-than-expected profits.
    ranjit.shinde@timesgroup.com