IT Stocks Outlook for the week – 11 to 15.01.2016
(TCS,
Infosys to set trend for sector next week)
( www.rupeedesk.in )
Information
technology giants Tata Consultancy Services Ltd and
Infosys
Ltd are expected to set the trend for the sector as both companies
will
detail their Oct-Dec earnings next week.
IT
companies are seen posting muted earnings due to the various
challenges
they faced during the quarter. Oct-Dec is traditionally a weak
quarter
for the sector due to seasonal furloughs. Suspension of Chennai
operations
due to heavy floods and cross-currency headwinds are
expected
to further weaken the performance of these companies.
TCS,
which will kick off the earnings season for the sector on Jan 12, is
seen
posting a 2% fall in consolidated net profit at 59.81 bln rupees, and a
2%
rise in consolidated revenue at 275.86 bln rupees.
On the
other hand, Infosys, which will detail Oct-Dec earnings Jan 14, is
seen
posting consolidated net profit of 34.33 bln rupees, up 1%
sequentially,
and revenue of 157.55 bln rupees, up 1% from a quarter ago.
All
eyes are now on TCS and Infosys as these two companies are the
leaders
in the sector.
If
these companies post lower-than-expected performance, market players
will
not have much hope on the sector and might choose to sell in order to
minimise
losses. We are bullish on few midcap IT companies such as
KPIT
Technologies Ltd, Mphasis Ltd, and Cyient Ltd due to reasonable
valuations
and expectations of improvement in performance.