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Stocks of major information technology companies are seen rangebound next week with a positive bias after all the top companies reported better-than-expected Apr-Jun results. After the strong performance of the top three companies in the sector, HCL Technologies too kept the trend going when it announced a 16.3% sequential growth in its Apr-Jun consolidated net profit to 12.10 bln rupees, aided by an increase in the company's businesses in Europe and the US, and foreign exchange gains. HCL Technologies' consolidated revenues in Apr-Jun grew 8.1% to 69.44 bln rupees from a quarter earlier.
A depreciating rupee is also seen helping the Indian IT companies to a certain extent, though the volatility can be a cause for concern. The Indian currency has tumbled over 8% against the dollar since the beginning of the current financial year. The rupee fell to a record closing low of 60.71 a dollar on Jun 26 and to its record traded low of 61.2050 a dollar on Jul 8. Operationally all the top companies have performed well and that too without much help from the depreciating rupee. Going forward we expect these companies to perform better than last year.
Further, we expect Indian IT companies to increase their focus on acquisition in the near term as they have substantial net cash positions and because organic growth is slowing down. Near-term focus in our view is likely to remain more towards traditional spend areas (management, consulting and enterprise solutions) across Indian IT companies aimed at geographical expansion and greater depth in industry solutions.
Stocks of major information technology companies are seen rangebound next week with a positive bias after all the top companies reported better-than-expected Apr-Jun results. After the strong performance of the top three companies in the sector, HCL Technologies too kept the trend going when it announced a 16.3% sequential growth in its Apr-Jun consolidated net profit to 12.10 bln rupees, aided by an increase in the company's businesses in Europe and the US, and foreign exchange gains. HCL Technologies' consolidated revenues in Apr-Jun grew 8.1% to 69.44 bln rupees from a quarter earlier.
A depreciating rupee is also seen helping the Indian IT companies to a certain extent, though the volatility can be a cause for concern. The Indian currency has tumbled over 8% against the dollar since the beginning of the current financial year. The rupee fell to a record closing low of 60.71 a dollar on Jun 26 and to its record traded low of 61.2050 a dollar on Jul 8. Operationally all the top companies have performed well and that too without much help from the depreciating rupee. Going forward we expect these companies to perform better than last year.
Further, we expect Indian IT companies to increase their focus on acquisition in the near term as they have substantial net cash positions and because organic growth is slowing down. Near-term focus in our view is likely to remain more towards traditional spend areas (management, consulting and enterprise solutions) across Indian IT companies aimed at geographical expansion and greater depth in industry solutions.
