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We expect 4.3-5.8% qoq US$ revenue growth for our IT large caps (except Wipro; with TCS
and HCL Tech at the top end); 80-100bp cross-currency tailwinds; and qoq margin declines
at most players given wage inflation. The recent share price correction (though rebounded)
driven by visa and macro issues looks overdone
Volume growth likely to pick up post seasonally-muted growth in 4QFY11
We expect volume growth to pick up during 1QFY12 at most of our Indian IT large caps after
being seasonally muted in 4QFY11. We project 4.3-5.8% qoq growth in US$ revenues
across the companies (except Wipro), with the highest growth again at TCS and HCL Tech.
Also, cross-currency tailwinds should result in an 80-100bp improvement in US$ revenues.
Vertically, we expect broad-based growth, with higher growth in BFSI, retail and
manufacturing and continued muted growth in telecom. We believe that any management
comments relating to the impact of macro/visa issues on IT services demand/business would
be a key issue to watch at the 1Q results. We expect no material revisions by Infosys to its
constant-currency guidance for FY12 US$ revenues.
Besides wage inflation, a higher tax rate should result in muted PAT growth qoq
We estimate a 60-300bp qoq operating margin decline across our large caps (except HCL
Tech), considering seasonal wage hikes effective 1QFY12 and rupee appreciation. However,
Infosys is likely to see a decline at the higher end of this range (given wage hikes/promotions
effective April 2011) and Wipro at the lower (as its wage hikes are effective June 2011). The
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
We expect 4.3-5.8% qoq US$ revenue growth for our IT large caps (except Wipro; with TCS
and HCL Tech at the top end); 80-100bp cross-currency tailwinds; and qoq margin declines
at most players given wage inflation. The recent share price correction (though rebounded)
driven by visa and macro issues looks overdone
Volume growth likely to pick up post seasonally-muted growth in 4QFY11
We expect volume growth to pick up during 1QFY12 at most of our Indian IT large caps after
being seasonally muted in 4QFY11. We project 4.3-5.8% qoq growth in US$ revenues
across the companies (except Wipro), with the highest growth again at TCS and HCL Tech.
Also, cross-currency tailwinds should result in an 80-100bp improvement in US$ revenues.
Vertically, we expect broad-based growth, with higher growth in BFSI, retail and
manufacturing and continued muted growth in telecom. We believe that any management
comments relating to the impact of macro/visa issues on IT services demand/business would
be a key issue to watch at the 1Q results. We expect no material revisions by Infosys to its
constant-currency guidance for FY12 US$ revenues.
Besides wage inflation, a higher tax rate should result in muted PAT growth qoq
We estimate a 60-300bp qoq operating margin decline across our large caps (except HCL
Tech), considering seasonal wage hikes effective 1QFY12 and rupee appreciation. However,
Infosys is likely to see a decline at the higher end of this range (given wage hikes/promotions
effective April 2011) and Wipro at the lower (as its wage hikes are effective June 2011). The
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