IT Sector Overview By Dipen Shah Of Kotak Securities

IT Sector Overview By Dipen Shah Of Kotak SecuritiesMoving ahead after quarterly outcomes, IT firms have showcased their viewpoint for the upcoming year.

The figures manifest passive spending by customers this quarterly period. This submissive spending fact in the quarterly period is not shocking as customers generally outset spending post February once the financial plan gets settled. Hence, the low spending incidences and automatically, the submissive growth in income in the first quarter are quite distinctive in nature.

While the management remarks do not symbolize a cheerful market, the main points of the viewpoint are the following:

- The BFSI section has lost pace in its decision making process. All the major IT companies including Infosys and Cognizant are optimistic about a postponement in their projects. Infosys has also kept ramping down some customers’ projects on the table. A few wise actions can successfully determine these momentary troubles.

- The drecline in the growth in the IT division has not affected its vertical sections, which are doing noticeably well.

- Retarded decision making in the BFSI segment has disquieted the US section as well. In contrast, there is growth seew in the European market, though it is marginal naturally.

- HCTL and TCS have been faring well compared to Infosys and Wipro. TCS has gained from its restructured deals that offer good pricing discounts. Its performance in the last four quarters has been quite satisfactory with its revenues increasing by Rs 11,569 crore (Rs 115.69 billion) during this period. On the other hand, Infosys observed a disappointing quarter with its discretionary spending level increasing.

- Infosys and Wipro handed first quarter guidance that again discloses its slow speed of development. In addition, Cognizant slashed its guidance in CY2012 to 20%.

Mr. Dipen Shah of Kotak Securities offers his viewpoint giving precise details about the same.

- Everything, including the management commentary and guidance, has been reflecting the muted growth of Infosys and Wipro. The challenges are short lived and eventually be solved. Cognizant is already guiding for a 4.5% growth in the April- June quarter. Even, Infosys has paved way for a 4.5% to 5% growth for the April - June quarter.

- The lower than anticipated growth in Infosys is because of the ramp-down in orders from several accounts, chiefly the financial segment. With novel projects that it has under way, this trouble may not persist for long.

- TCS has accepted revamping in the month of April.

- With the start of the second quarterly period, a threshold of expansion and development is projected.

- Making the most of the fall in the Indian unit, constructive hedge positions can be taken by firms at a low rate.

The assessment of the Indian currency and the macro level alterations in the worldwide market can further act as a decisive factor. While the last quarter outcome was not all optimistic, the June quarter can be the decisive moment for many IT firms.

Owing to the continuing doubt at the macro level, achieving 20-25% development may appear demanding in the short-range. But, there is vast room for expansion in the medium to long-term.




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