Emkay Global Financial Services has come with its earning estimates on IT sector for June quarter. The research firm expect a subdued quarter from our Tier I IT services coverage universe with cross currency moves (100-150 bps QoQ adverse impact) driving further weakness in US$ revenue growth. Amongst Tier I companies, we expect a 0.2%-2.9% QoQ growth with TCS at the upper end and Infosys at the lower end.
Emkay Global Financial Services results preview on IT sector: We expect a subdued quarter from our Tier I IT services coverage universe with cross currency moves (100-150 bps QoQ adverse impact) driving further weakness in US$ revenue growth. Amongst Tier I companies, we expect a 0.2%-2.9% QoQ growth with TCS at the upper end and Infosys at the lower end. For our Tier II universe we expect a 0.3-10.3% QoQ US$ revenue growth with MindTree at the lower end and eClerx at the upper end (aided by consolidation of recently acquired Agilyst). We expect Hexaware to report a 3.8% QoQ growth, in line with co guidance of US$ 91-92 mn despite ~90 bps cross currency headwinds We expect Infosys to revise it’s FY13 revenue outlook to ~6.5-8.5% YoY growth V/s 8-10% earlier driven by cross currency movements , however expect EPS outlook to be raised to ~Rs 172-174 ( V/s Rs 159-161 earlier)driven by lower currency resets. We believe that investors will majorily focus on Sep’12 qtr guidance for both Infosys and Wipro( expect Infosys to guide for 3- 4% QoQ growth and Wipro to guide for a 2-4% QoQ growth for Sep’12 qtr) Key areas of investor focus (1) outlook on decision making and project ramp ups , (2) pricing outlook specifically in US BFS clients , (3) opportunities in Europe and (4) reasons for subdued commentary and outlook from Indian vendors given both strong performance and outlook from Accenture recently We continue to be selectively positive on the sector with Infosys and HCL Tech rated ACCUMULATE in the Tier I coverage universe. Amongst Tier II companies, MindTree and Hexaware remain our preferred bets.| Company | Net Sales (Rs mn) | Growth (%) | APAT (Rs mn) | Growth (%) | ||||
| Q1FY13 | Q1FY12 | YoY | QoQ | Q1FY13 | Q1FY12 | YoY | QoQ | |
| eClerx Services | 1547 | 996 | 55% | 21% | 433 | 353 | 23% | 42% |
| HCL Tech | 58376 | 42995 | 36% | 12% | 6930 | 4910 | 41% | 19% |
| Infinite Computer | 3018 | 2623 | 15% | 13% | 316 | 300 | 6% | 52% |
| Hexaware Tech | 5023 | 3341 | 50% | 15% | 796 | 603 | 32% | -10% |
| Infosys | 97605 | 74850 | 30% | 10% | 24028 | 17230 | 39% | 4% |
| Mahindra Satyam | 18814 | 14339 | 31% | 13% | 3156 | 2252 | 40% | -26% |
| Mindtree | 5616 | 4131 | 36% | 7% | 895 | 345 | 159% | 30% |
| Mphasis | 14360 | 12936 | 11% | 8% | 2304 | 1942 | 19% | 22% |
| NIIT Tech | 4698 | 3288 | 43% | 6% | 538 | 412 | 31% | 17% |
| Persistent Systems | 3032 | 2238 | 35% | 12% | 616 | 276 | 124% | 50% |
| TCS | 149819 | 107971 | 39% | 13% | 33472 | 23804 | 41% | 14% |
| Tech Mahindra | 15444 | 12925 | 19% | 9% | 2874 | 2734 | 5% | -22% |
| Wipro | 107197 | 85640 | 25% | 9% | 16790 | 13350 | 26% | 13% |
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