Not that anyone is expecting major gains from India’s actively traded IT outsourcing firms, but analysts are saying investors shouldn’t expect any upside surprises.
Average earnings estimates based on the forecasts of five brokerages and projection of The Economic Times of India’s Intelligence Group, revenue for the top four IT players is expected to increase by 2.6 percent from the third quarter and by 15 percent from 2011. Net profit is likely to fall by 2.5 percent, however, from the third quarter but up a decent 12 percent year-on-year for names like Tata Consultancy, Infosys (INFY), Wipro (WIT) and HCL Technologies.
Pmargins are expected to remain under pressure compared with the previous quarter. Except for Wipro, analyst heard by the ET said that the other three players are likely to report a sequential drop in net profit for the December quarter. The loss of Infosys, the second largest among publicly listed IT players in the country, is expected to be the highest at 7 percent lower. Wipro, on the other hand, is expected to report 1.1 percent sequential increase in net profit.
Infy is trading at a 36 per cent discount to its 10-year median price to earnings ratio, the widest gap among the foursome. The discount comes even as the fiscal 2013/14 earnings growth projections across India’s IT majors are around 5-6 per cent, according to Thomson Reuters’ StarMine estimates.
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