IT Stocks Will be Re-rated If Infosys Q4 Numbers Lags Estimates

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IT stocks have lost heavy ground following results of Tata Consultancy Services, Wipro and HCL Tech. None of these stocks beat estimates.

IT Stocks Will be Re-rated If Infosys Q4 Numbers Lags Estimates
Analysts had warned of a muted quarter and most of the companies including the likes of HCL Tech had already issued margin warnings on cross currency headwinds.

Wipro which guided for revenues also painted a flat dollar revenue guidance. All eyes are now on IT major Infosys to really surprise the markets with a decent performance.

Infosys is expected to reported flat revenue in rupee terms, while the net profits are expected closer to Rs 3200 crores, which would be a marginal fall over the previous quarter.

The company may guide for dollar revenues in the range of 7-10 per cent and this would be eagerly watched number.

If Infosys reports numbers that see margins being squeezed significantly or numbers that our way below estimates, once could easily see the software sector getting re-rated on the downside.

Almost all of the top mutual fund schemes in the country have Infosys in their portfolio and its hoped that the company performs during the quarter.

What's most important would be the management commentary regarding future projects and addition of clients. Guidance on this front and strategy for the future would also be important things to watch out for.

We already have the likes of Wipro, HCL Tech and TCS reporting below par numbers. If Infosys also fails to deliver be rest assured that we would see a downgrade in rating for IT stocks from leading brokerage houses.

GoodReturns.in

Read more about: wipro, infosys, hcl tech
Story first published: Thursday, April 23, 2015, 8:39 [IST]
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