Market Voice: Vaibhav Agarwal, Vice-president (Research), Angel Broking

'evenues of IT companies may rise up to 20 per cent'

With Infosys reporting lower-than-expected quarterly results, Vaibhav Agrawal, vice-president (Research), Angel Broking, tells Puneet Wadhwa that the volume growth will keep the IT pack going. Edited excerpts:

Are Infosys results in line with your expectations?
Infosys Technologies has reported revenues of Rs 6,198 crore for the quarter ended June, which is in line with our expectations. However, the bottom line of Rs 1,488 crore has disappointed. We were expecting a four per cent sequential decline in the bottom line to Rs 1,550 crore.

What about the guidance?
The guidance has been strong and is in line with our expectations. Infosys expects income to be in the range of Rs 6,563-6,626 crore in the second quarter of the current financial year. This confirms our view that volume growth is happening and off-shoring will increase as we go along.

There have been concerns regarding the slowdown in the US economy. With troubles in the euro zone not yet over, how do you see things panning out for the information technology (IT) pack?
In terms of volume growth, there is nothing much to worry about. However, the appreciation of rupee against the euro may cause some trouble. Having said this, I would like to mention that the billing in euro zone is mostly pegged to the US dollar, with an overall exposure of 10-15 per cent of the total earnings.

What is your outlook on the rupee?
In the near term, the rupee can appreciate due to strong capital inflows. However, over the medium term, expect the Indian unit to depreciate on the back of widening current account deficit.

Do you expect similar results from the other frontline companies like TCS and Wipro?
Mostly, yes. Top tier IT companies are expected to report a growth of 18-20 per cent in revenues on a year-on-year basis.