| Q3 Watch: Re rally to hit software numbers |
| BS Research / Mumbai January 09, 2007 |
| Software service companies are expected to be hit by the appreciation of the rupee, which moved up by almost 2%, during the quarter ended December 31, 2006. The guidance for December 2006 quarter by software companies on the expectation of rupee at 45.30-45.60 per dollar might go awry with the rupee averaging 44.36 during the quarter ended December 2006. According to most analysts tracking the sector, frontline as well as mid-size software companies are unlikely to repeat its second quarter performances. CLSA estimates Indian IT service companies to post revenue growth of 6.8% quarter-on-quarter (QoQ) and 41% year-on-year (YoY) for the quarter ended December 2006. Analysts at Motilal Oswal Research predicts quarter-on-quarter revenue growth of 7.3% and 41.7% year-on-year. The quarter-on-quarter profit growth is expected to be 6.6%, and year-on-year growth at 44.30%. IT analysts at Sharekhan expect the performance of frontline companies to be affected in Q3 by the dual impact of a lower number of working days and a steep appreciation in the rupee. They estimate an average revenue growth in the range of 5-8% on a sequential basis for the period. The profit growth is expected to be in range of 1-6.5%. Frontline and mid-size software companies had done well during the quarter ended September 2006 with revenue growth of over 11% QoQ and 50% YoY. The profit growth was 22% QoQ and 54.6% YoY. Infosys Technologies' outlook for December quarter was based on an exchange rate of Rs 45.60 a dollar. The company had expected a YoY revenue growth of 42.3%-43.2% & Q-o-Q growth of 4.4%-5%. Earnings per share was expected to be Rs 16.84 - a YoY growth of 42.2%. Analysts are now expecting Infosys revenue to grow at 7% QoQ and over 46% YoY. The QoQ earnings are expected to grow between 4.8-7% and YoY by around 50%. Wipro was expected to report 7.5% growth in income from global IT business in the quarter ended December 2006. Analyst expect Wipro |
