Tech firms may see robust Sept

Indian software services companies are likely to post the strongest September quarter with revenue growth for the software majors around 35-40 per cent and net profit growth rate expected to be over 35 per cent. During the quarter ended September 2005, software services companies had posted revenue growth of 29 per cent and net profit had rised by over 26 per cent.

The CLSA research report predicts that front line IT services firms would post revenue growth of 9 per cent quarter on quarter and 39.7 per cent during the quarter ended September 2006. JM Morgan Stanley (JMMS) research expects the larger IT firms to show 7-8 per cent Q/Q and 40 per cent YoY growth in revenue during the quarter ended September 2006.

CLSA expects Infosys quarter revenue around Rs 3,369 crore, up 11.7 % Q/Q and 46.8 per cent YoY compared to Infosys guidance of Rs 3,257-3,280 crore, growth of 42.43 per cent. JMMS puts Infosys September quarter revenue at Rs 3,293 crore, up 9.9 per cent Q/Q and 44 per cent YoY.

As per JM Morgan Stanley and CLSA research, TCS expected post revenue growth of 7-7.6 per cent Q/Q and 40-41.4 per cent YoY. Wipro revenue for the quarter ended September over June quarter likely to be up by 8.5-8.8 Q/Q and a 41-41.4 per cent YoY. Satyam Computer too expected to post Q/Q revenue growth of 7.6-8.8 and YoY revenue growth of 35-35.9 per cent.

The operating margins during the September quarter according to CLSA research expected to be higher for Infosys Technologies and TCS while Wipro and Satyam may report a decline in margins. TCS and Infosys both expected to show increase operating margins by 160-175 basis points while margins for Satyam and Wipro likely decline by 134-200 basis points.

The JMMS research expects margins for Infosys to go up by 85 basis points and it is likely to up 160 basis points for TCS. Wipro's operating margins likely to decline by 27 basis points and for Satyam the decline in margins will sharp at 207 basis points. The sharp fall in Satyam's margins likely due to wage increases that kicked in from July.

The net earnings for software firms expected to grow 6-8 per cent Q/Q and over 35 per cent YoY. Infosys which has given guidance of YoY earnings growth between 32.4 and 33.8 per cent, would expected to show Q/Q earnings growth of 5.3-8.1 per cent and YoY growth of 38-46.8 per cent. TCS earnings expected to grow 5.7-8.1 per cent Q/Q and 30.7-35 per cent YoY.