Emkay Global Financial Services expect a an inline Q2 quarter from our Tier I IT services coverage universe with marginal cross currency gains (20-30 bps QoQ benefit) driving a 2.2-4.1% QoQ US$ revenue growth with Wipro at the lower end (+2.2% QoQ) and TCS (+4.1% QoQ) at the upper end.
For our Tier II universe we expect a 2.3-8.4% QoQ US$ revenue growth with Hexaware at the lower end and Infinite at the upper end. We expect strong revenue growth from eClerx(+8% QoQ , aided by full qtr impact of Agilyst acquisition) and Tech M (+5.9% QoQ) yet again aided by HGS acquisition We expect Infosys to deliver a 3% QoQ growth for Sep’12 qtr , in line with implied asking rate for it’s FY13 revenue growth outlook of ‘atleast 5% YoY growth’. A reset in currency assumptions could drive a mark down in annual EPS outlook to ~Rs 163-166( V/s ‘atleast Rs 166.5’ earlier). If Infosys decides to give wage hikes, EPS outlook could be marked down further Key areas of investor focus (1) pick up in decision making and spending in financial services vertical , (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, Tech M/Mah Satyam, MindTree and Hexaware remain our preferred bets.| Company | Net Sales (Rs mn) | Growth (%) | APAT (Rs mn) | Growth (%) | ||||
| Q2FY13 | Q1FY13 | YoY | QoQ | Q2FY13 | Q1FY13 | YoY | QoQ | |
| eClerxServices | 1663 | 1537 | 46% | 8% | 389 | 493 | -12% | -21% |
| HCLTech | 61228 | 59191 | 32% | 3% | 7971 | 8414 | 66% | -5% |
| Infinite Computer | 3498 | 3192 | 36% | 10% | 351 | 354 | 14% | -1% |
| HexawareTech | 5052 | 5050 | 32% | 0% | 800 | 890 | 8% | -10% |
| Infosys | 99040 | 96160 | 22% | 3% | 23869 | 22890 | 25% | 4% |
| Mahindra Satyam | 19303 | 18799 | 22% | 3% | 2801 | 3523 | 18% | -21% |
| Mindtree | 6052 | 5630 | 33% | 7% | 620 | 890 | 14% | -30% |
| Mphasis | 13988 | 13552 | 6% | 3% | 2106 | 2088 | 15% | 1% |
| NIITTech | 5091 | 4696 | 37% | 8% | 547 | 576 | 19% | -5% |
| Persistent Syste | 3129 | 3007 | 31% | 4% | 380 | 416 | 17% | -9% |
| TCS | 155880 | 148687 | 34% | 5% | 33454 | 32806 | 37% | 2% |
| TechMahindra | 16237 | 15434 | 22% | 5% | 2914 | 3385 | 21% | -14% |
| Wipro | 108193 | 106530 | 19% | 2% | 16331 | 15802 | 26% | 3% |
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