Shares of Infosys, TCS, HCL Tech among others gained around 1 percent on Wednesday as the rupee depreciation is expected to boost their earnings in April-June. Tech Mahindra was up 7 percent following better-than-expected Q4 results.
Most IT stocks gained around 1 percent on Wednesday as the the recent rupee depreciation coupled with a steady demand environment is seen boosting earnings of outsourcing firms in the April-June quarter, although the US immigration bill still remains a concern, analysts said.
A US senate panel on Tuesday approved legislation, which will give millions of immigrants living illegaly in the US, an opportunity of the country's citizenship, and eases some of the strict hiring requirements targetted at US high-tech firms in the earlier draft.
"The US immigration is still to be passed and so that will continue to remain a overhang on IT companies. But the rupee has depreciated to over Rs 55 to a US Dollar, which will help their earnings...Tech Mahindra results were also better than expected," Angel Broking analyst Ankita Somani told moneycontrol.com.
IT companies earn a large proportion of revenue in Dollars from US companies. So a falling rupee will give a big boost to their repatriated earnings.
Rupee was trading at Rs 55.55 to the US Dollar in noon trade on Wednesday.
CP Gurnani, Tech Mahindra's MD said on Wednesday the company was optimistic about FY14, buoyed by its deal pipeline, business traction from recent acquisitions and leverage of business synergies with Mahindra Satyam .
The company like several other software services exporters also said the US market was on the recovery path.
IT companies were hurt by uncertainties in the overall global economy last year, as companies slowed decision making and cut back discretionary spends.
But companies as well as analysts say improving demand environment will boost the overall growth for IT companies this year.
At noon, Tech Mahindra was trading at Rs 964, up 6 percent, Infosys was up 0.8 percent at Rs 2,415.95, Tata Consultancy Services gained 1.3 percent at Rs 1,494.15 and HCL Tech rose 1.5 percent to Rs 747.85 on NSE. Most other stocks were up in 0.5-1 percent range.
Tech Mahindra stock price
On March 27, 2015, Tech Mahindra closed at Rs 645.95, down Rs 5.2, or 0.8 percent. The 52-week high of the share was Rs 749.50 and the 52-week low was Rs 419.41.
The company's trailing 12-month (TTM) EPS was at Rs 24.47 per share as per the quarter ended December 2014. The stock's price-to-earnings (P/E) ratio was 26.4. The latest book value of the company is Rs 89.47 per share. At current value, the price-to-book value of the company is 7.22.
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