IT companies likely to post steady earnings growth in Jan-Mar'13

IT companies likely to post steady earnings growth
Experts reckon that Indian IT companies are likely to report steady earnings growth for the fourth quarter of FY 2012-13 as discretionary spending improved amid stabilization in the US economy, one of the major markets for Indian IT service providers.

IT bellwether Infosys will kick off the Indian earnings season on Friday, April 12, 2013. The next IT company to announce its results would be HCL on April 17, 2013, while TCS and Wipro have not yet revealed the date for announcement of their financial earnings for the last quarter.

"We expect companies under our coverage to report a sequential revenue growth of about 2.6 per cent, driven by volumes", brokerage firm Kotak Securities said in a report.

While growth remains muted in the US economy and the EU battles a recession, the robust stimulus measures undertaken by the top two biggest markets for Indian IT services industry signals a slightly better economic outlook.

The January-March quarter has traditionally not been a very strong quarter for Indian IT companies as budgets get closed.

Meanwhile, UK based bank Barclays also signaled renewed optimism over the earnings growth of the IT sector last quarter.

"Early closure of IT budgets, slight improvement in discretionary spending and relatively better US GDP growth are all pointing to an improving revenue trend for Indian IT services companies in FY14 and numbers for the March quarter should reflect steady growth," Barclays it said.

The US economy expanded at a faster than expected rate in the fourth quarter of 2012 as GDP was upwardly revised to 0.4 per cent from 0.1 per cent as business spending picked up , signaling an improving outlook for Indian IT services industry.

Read more about: infosys, tcs
Story first published: Monday, April 8, 2013, 9:30 [IST]
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