Top Indian IT companies like TCS and HCL Technologies are expected to post strong results in April-June quarter, with revenues growing by 1-7 percent on the back of strong demand, say market analysts.
While TCS and HCL Technologies are expected to lead the pack with income growth of 7 and 5.8 percent, respectively, Infosys and Wipro are likely to report a relatively soft set of numbers on account of the organizational restructuring, they tell.
Industry bellwether Infosys will be the first to announce its results on July 12, followed by Tata Consultancy Services (TCS) on July 14 while Wipro will release quarterly results on July 20.
"We expect robust sequential volume growth for most companies...Positive cross-currency kicker should aid reported USD revenue growth further. All in all, we expect 1-7 percent q-o-q USD revenue growth from the Tier-I names, with TCS leading the pack and Wipro being the weakest, in line with its guidance," Kotak Institutional Equities Research said in its Q1 FY'12 preview of the Technology sector report.
We also expect Infosys' revenue performance to be relatively soft with the company just about meeting the upper-end of its q-o-q revenue growth guidance at cross-currency rates assumed in its guidance, it added.
Despite concerns about the global economy, demand for IT services across sectors like banking, financial services and insurance (BFSI), retail and manufacturing remains robust.
For the June quarter, Tata Consultancy Services (TCS) is expected to lead the pack with a 7 percent sequential revenue growth, followed by HCL Technologies with a 5.8 percent quarter on quarter (QoQ) growth, Sharekhan said in its Q1 FY'12 IT earnings preview.
Infosys is expected to grow by 4.4 percent in topline, while Wipro's IT services is likely to post a 3.4 percent QoQ growth.
Mid-cap firms like Polaris Software Lab and NIIT Technologies are likely to report an around five percent sequential revenue, it added.
However, analysts say the recent visa controversies are something to watch out for. "Issues pertaining to visas and potential aggravation of protectionist policy in the US have raised an alarm for an outsourcing backlash in the coming years.
"Although most of the companies' managements have indicated at a strong demand undercurrent for FY2012, they and industry bodies have also voiced concerns on the visa issue," Sharekhan said.
"Given the backdrop, we believe that in the upcoming earnings season there will be larger focus on specific management commentary on these issues, which will provide clarity and roadmap for the future," it added.
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