Infosys Q4 PAT seen down 2.5% at Rs 2309cr: Kotak Sec
Kotak Securities has come out with its earnings estimates on Infosys for March quarter FY13. According to the research firm, the company's Q4FY13 sales are likely to go up by 2.3% at Rs 10,664.6 crore, quarter-on-quarter (QoQ) basis.
April 11, 2013 / 11:39 IST
Kotak Securities has come out with its earnings estimates on Infosys for the March quarter FY13. According to the research firm, the company's Q4FY13 sales are likely to go up by 2.3% at Rs 10,664.6 crore, quarter-on-quarter (QoQ) basis.
The company's net profit is seen down 2.5% at Rs 2309.6 crore, QoQ.Kotak Securities report on IT sector Q4 earning estimates:We expect companies under our coverage to report a sequential revenue growth of about 2.6%, driven by volumes. Volumes for the Top 4 companies are expected to rise by 2% - 3%. The first quarter of the calendar is usually a lean quarter with client budgets getting finalized. Slower growth in discretionary spends and client specific ramp-downs are expected to impact growth of select companies, especially mid-caps, we believe. The cross currency volatility impact is expected to be marginally negative. Average realizations are expected to have remained stable QoQ, barring few cases of declines. EBIDTA margins are expected to be almost stable QoQ for our coverage universe. Client specific ramp-downs, appreciation of rupee v/s GBP, M&A, etc will likely have an impact, compensated by better leverage on costs. We expect EBIDTA to rise by about 3% QoQ, for companies under our coverage. Companies follow different hedging strategies and different accounting policies. This may lead to corresponding impact of currency volatility on other income. Consequently, PAT is expected to remain almost flat on a sequential basis for companies under our coverage. We will watch out for :
a) The guidance from Infosys, if it gives an annual guidance.
b) Comments by company managements on budget finalization, spending patterns and order-booking trends,
c) Pricing declines, if any and comments on the same,
d) Strength in any of the verticals / services We believe that, while the economies of USA and EU may take long to improve, the stimulus measures taken by them have eased concerns of catastrophic defaults / bankruptcies and helped them stabilise. There has likely been some improvement in velocity of decision making and discretionary budgets are also getting released, we understand. This may prevent demand from falling in the foreseeable future. Also, there is reportedly a strong demand for H1-B visas. We maintain our constructive view on the medium-to-long term prospects of the sector on expectations of improving demand over this period. 2% - 3% sequential volume growth expected for top tier companies We expect top-tier companies to report organic volume growth of about 2% - 3% QoQ. We understand that, apart from seasonality (1Q of calendar is usually a muted growth quarter), sluggish discretionary spends and only a gradual improvement in decision-making has likely impacted growth. We will closely hear management comments on the potential order flows from USA as well as Europe. From our interactions with managements, we understand that, some pockets of BFSI (capital markets) and the telecom vertical remain impacted. However verticals like automotive, manufacturing, travel & transport continue to witness traction and companies have been winning deals in these verticals. There are client - specific ramp-downs which are expected to hit growth rates of some of the mid-caps. However, we expect this to be a short term impact, which should be set-off by scale up in other accounts. While volumes are expected to grow QoQ, we expect realizations to be largely stable, subject to some cases of reductions. However, we will closely watch out for management comments on potential price reductions. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
