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Stocks of major information technology companies are seen trading in a range next week, as they may consolidate after the rally seen on better-than-expected Oct-Dec earnings of the top four companies. Yesterday, stocks of most IT companies fell on profit booking and on correction after their rise in the last six sessions. The CNX-IT index, which has risen 15% in the last four days, has already reached its peak and is now consolidating. After Infosys Ltd, Tata Consultancy Services Ltd, and HCL Technologies dazzled the market with their Oct-Dec performances, Wipro Ltd too joined the trend as its Oct-Dec earnings topped estimates. But the Street expressed disappointment over the company's lower business volume growth. Wipro reported a 6.6% sequential rise in consolidated net profit for Oct-Dec at 17.16 bln rupees, higher than a consensus of 16 brokerages estimates at 16.1 bln rupees.
The company's consolidated net sales rose 3.5% sequentially to 109.89 bln rupees, as compared with market estimates of 109.4 bln rupees. However, a 1% de-growth in its business volume pulled down its stocks nearly 8% yesterday. Overall a mixed quarter from Wipro, with revenues coming inline largely due to pricing, but volume de-growth is a soft. The volume growth has been lower than the peer group. On Jan 11, Infosys, the country's second-largest software exporter, had posted a consolidated net profit of 23.69 bln rupees for Oct-Dec. Its net sales for the quarter, including that from the newly-acquired Lodestone Holding AG, rose 5.7% on quarter to 104.24 bln rupees. Infosys' strong performance had set a positive momentum in the market, and the stellar numbers of Tata Consultancy Services and HCL Technologies added to this trend.
TCS reported a 1.1% sequential rise in net profit at 35.52 bln rupees for Oct-Dec. The country's largest software exporter posted a 2.9% rise in net sales at 160.7 bln rupees for the quarter. Similarly, HCL Technologies reported a consolidated net profit of 9.65 bln rupees for Oct-Dec, up 9% on quarter, and a consolidated revenue of 62.74 bln rupees, up 3% sequentially. Mid-sized MindTree Ltd, which announced its Oct-Dec earnings yesterday, reported 36.8% sequential rise in its Oct-Dec net profit, helped by a foreign exchange gain of 142 mln rupees. The company's net profit rose to 988 mln rupees from 722 mln rupees in Oct-Dec, while its income from operations fell 1% on quarter but rose 13% on year to 5.9 bln rupees. The Street will now watch out for Oct-Dec earnings of mid-sized players like Tech Mahindra and Mphasis Ltd.
As per TPI, A global outsourcing advisory company, 2013 is expected to be slightly muted given the mixed macro environment. While short term pipeline looks healthy, longer term outlook remains uncertain. However, contract push-outs and fiscal uncertainties could impact 1H (Jan-Jun) contract awards in 2013. As such they remain cautiously optimistic on services spends and indicated 3-4% growth in overall IT services market in CY13 (2013).
Stocks of major information technology companies are seen trading in a range next week, as they may consolidate after the rally seen on better-than-expected Oct-Dec earnings of the top four companies. Yesterday, stocks of most IT companies fell on profit booking and on correction after their rise in the last six sessions. The CNX-IT index, which has risen 15% in the last four days, has already reached its peak and is now consolidating. After Infosys Ltd, Tata Consultancy Services Ltd, and HCL Technologies dazzled the market with their Oct-Dec performances, Wipro Ltd too joined the trend as its Oct-Dec earnings topped estimates. But the Street expressed disappointment over the company's lower business volume growth. Wipro reported a 6.6% sequential rise in consolidated net profit for Oct-Dec at 17.16 bln rupees, higher than a consensus of 16 brokerages estimates at 16.1 bln rupees.
The company's consolidated net sales rose 3.5% sequentially to 109.89 bln rupees, as compared with market estimates of 109.4 bln rupees. However, a 1% de-growth in its business volume pulled down its stocks nearly 8% yesterday. Overall a mixed quarter from Wipro, with revenues coming inline largely due to pricing, but volume de-growth is a soft. The volume growth has been lower than the peer group. On Jan 11, Infosys, the country's second-largest software exporter, had posted a consolidated net profit of 23.69 bln rupees for Oct-Dec. Its net sales for the quarter, including that from the newly-acquired Lodestone Holding AG, rose 5.7% on quarter to 104.24 bln rupees. Infosys' strong performance had set a positive momentum in the market, and the stellar numbers of Tata Consultancy Services and HCL Technologies added to this trend.
TCS reported a 1.1% sequential rise in net profit at 35.52 bln rupees for Oct-Dec. The country's largest software exporter posted a 2.9% rise in net sales at 160.7 bln rupees for the quarter. Similarly, HCL Technologies reported a consolidated net profit of 9.65 bln rupees for Oct-Dec, up 9% on quarter, and a consolidated revenue of 62.74 bln rupees, up 3% sequentially. Mid-sized MindTree Ltd, which announced its Oct-Dec earnings yesterday, reported 36.8% sequential rise in its Oct-Dec net profit, helped by a foreign exchange gain of 142 mln rupees. The company's net profit rose to 988 mln rupees from 722 mln rupees in Oct-Dec, while its income from operations fell 1% on quarter but rose 13% on year to 5.9 bln rupees. The Street will now watch out for Oct-Dec earnings of mid-sized players like Tech Mahindra and Mphasis Ltd.
As per TPI, A global outsourcing advisory company, 2013 is expected to be slightly muted given the mixed macro environment. While short term pipeline looks healthy, longer term outlook remains uncertain. However, contract push-outs and fiscal uncertainties could impact 1H (Jan-Jun) contract awards in 2013. As such they remain cautiously optimistic on services spends and indicated 3-4% growth in overall IT services market in CY13 (2013).
