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From the News Desk
Tuesday, 10. January 2006
Robust Q3 Predicted for India's Tech
India's booming software firms are set to report robust quarterly earnings as outsourcing of technology services shifts up a gear from piecemeal contracting to long-term partnerships. A Reuters poll of 10 brokerages estimated quarterly profits jumped between 8.3 and 56.9 percent year-on-year for service companies, while product firm i-flex solutions ltd., in which Oracle Corp. holds a 43 percent stake, is set to show a doubling of net profit.
A weaker rupee in the October-December quarter, when it slipped about 2.3 percent against the U.S. dollar, could sweeten tech profits. But individual firms could see minor hiccups from salary increases and costs related to acquisitions or large deals. Analysts cited big deals set to be awarded and large-scale hiring as pointers to strong growth.
The earnings parade in India's USD 17-billion software and office service export industry -- powered by low-cost English-speaking workers earning a fifth of western wages -- kicks off on Tuesday with mid-sized Aztec Software and MphasiS BFL Ltd reporting their numbers. But the market will be eyeing bellwether Infosys Technologies, which is set to unveil its results on Wednesday, and will also be focused on its full-year forecasts.
"This quarter, everybody is going to be pleasantly surprised -- especially Infosys, TCS and even Wipro," said Sandeep Shenoy, industry analyst at Pioneer Intermediaries. Infosys is expected to post year-on-year net profit growth of 30 percent at 6.49 billion rupees (USD 146.4 million), compared with 4.97 billion rupees in the same quarter of 2004/05, while its sales are expected to jump 34 percent to 25.21 billion rupees on the year.
Tata Consultancy Services (TCS), India's top tech exporter, reports results a day after Infosys, the No. 2 player. TCS will show a yearly rise of 8.3 percent to 7.37 billion rupees and a strong sequential rise of 6.2 percent, according to the Reuters poll. Shenoy said TCS would rebound from a bad start to the fiscal year.
Earnings began rebounding the previous year as IT firms recovered from an industry slowdown witnessed after the telecoms and Internet meltdowns between 2000 and 2003.
A weaker rupee in the October-December quarter, when it slipped about 2.3 percent against the U.S. dollar, could sweeten tech profits. But individual firms could see minor hiccups from salary increases and costs related to acquisitions or large deals. Analysts cited big deals set to be awarded and large-scale hiring as pointers to strong growth.
The earnings parade in India's USD 17-billion software and office service export industry -- powered by low-cost English-speaking workers earning a fifth of western wages -- kicks off on Tuesday with mid-sized Aztec Software and MphasiS BFL Ltd reporting their numbers. But the market will be eyeing bellwether Infosys Technologies, which is set to unveil its results on Wednesday, and will also be focused on its full-year forecasts.
"This quarter, everybody is going to be pleasantly surprised -- especially Infosys, TCS and even Wipro," said Sandeep Shenoy, industry analyst at Pioneer Intermediaries. Infosys is expected to post year-on-year net profit growth of 30 percent at 6.49 billion rupees (USD 146.4 million), compared with 4.97 billion rupees in the same quarter of 2004/05, while its sales are expected to jump 34 percent to 25.21 billion rupees on the year.
Tata Consultancy Services (TCS), India's top tech exporter, reports results a day after Infosys, the No. 2 player. TCS will show a yearly rise of 8.3 percent to 7.37 billion rupees and a strong sequential rise of 6.2 percent, according to the Reuters poll. Shenoy said TCS would rebound from a bad start to the fiscal year.
Earnings began rebounding the previous year as IT firms recovered from an industry slowdown witnessed after the telecoms and Internet meltdowns between 2000 and 2003.
