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Stocks of information technology companies will take cues from Infosys' Jan-Mar results and guidance on Tuesday, followed by that of Tata Consultancy Services on Wednesday and Wipro on Thursday. As if in anticipation of better-than-expected results, IT stocks rose on Friday, with HCL Technologies closing 3.2% higher and Infosys gaining 1.1%. Broadly, we expect IT stocks to rise on Tuesday and Wednesday as we expect Infosys to report an inline quarter. The average estimate is for a quarter-on-quarter decline of 0.5% in Infosys' revenue and 2.4% in its net profit. As a result, even flat numbers from Infosys are likely to lead to strength in IT stocks.
Due to the low expectations, even a slight growth reported by Infosys would boost IT stocks in general. There are a few analysts who believe Infosys could surprise on the upside on the margin, profit and outlook front. Infosys is widely expected to guide for a growth of 6.5-8.5% this year. Even a 0.5% quarter-on-quarter USD (dollar) revenue growth in 4QFY14 (Jan-Mar) or FY15 (2014-15, Apr-Mar) USD revenue growth guidance exceeding 6% at the lower-end of the guidance range will likely push the stock up 3-5%.
Despite tempered expectations from the big two, the market in general expects most IT companies to report better numbers than TCS and Infosys. Stocks could see a correction if the smaller companies are unable to match up to the expectations. We expect HCLT (HCL Technologies), Wipro and TechM (Tech Mahindra) to report better growth rate than TCS and Infosys in Q4FY14. The overall performance from IT companies in the fourth quarter of 2013-14 would be better than that than in the year-ago quarter. It sees overall sequential dollar revenue growth at 2.1% compared to 1.8% in the same quarter last year.
Stocks of information technology companies will take cues from Infosys' Jan-Mar results and guidance on Tuesday, followed by that of Tata Consultancy Services on Wednesday and Wipro on Thursday. As if in anticipation of better-than-expected results, IT stocks rose on Friday, with HCL Technologies closing 3.2% higher and Infosys gaining 1.1%. Broadly, we expect IT stocks to rise on Tuesday and Wednesday as we expect Infosys to report an inline quarter. The average estimate is for a quarter-on-quarter decline of 0.5% in Infosys' revenue and 2.4% in its net profit. As a result, even flat numbers from Infosys are likely to lead to strength in IT stocks.
Due to the low expectations, even a slight growth reported by Infosys would boost IT stocks in general. There are a few analysts who believe Infosys could surprise on the upside on the margin, profit and outlook front. Infosys is widely expected to guide for a growth of 6.5-8.5% this year. Even a 0.5% quarter-on-quarter USD (dollar) revenue growth in 4QFY14 (Jan-Mar) or FY15 (2014-15, Apr-Mar) USD revenue growth guidance exceeding 6% at the lower-end of the guidance range will likely push the stock up 3-5%.
Despite tempered expectations from the big two, the market in general expects most IT companies to report better numbers than TCS and Infosys. Stocks could see a correction if the smaller companies are unable to match up to the expectations. We expect HCLT (HCL Technologies), Wipro and TechM (Tech Mahindra) to report better growth rate than TCS and Infosys in Q4FY14. The overall performance from IT companies in the fourth quarter of 2013-14 would be better than that than in the year-ago quarter. It sees overall sequential dollar revenue growth at 2.1% compared to 1.8% in the same quarter last year.
