D-Street gives thumbs down to Infy numbers

The much-awaited third quarter numbers of the IT honcho Infosys Technologies kicked off the result season on a muted note on below-than-expected earnings with investors now betting on TCS and Wipro, say experts.

Infosys Technologies today reported a 14.17 per cent growth in consolidated net profit at Rs 1,780 crore for the third quarter ended December 31, 2010, which according to market observers has failed to cheer the street.

"The IT major has disappointed the street with the muted December quarter results. Market, which was expecting much better numbers, will now look forward to smart numbers from other major players in the sector, including TCS and Wipro," Religare Securities Executive Vice-President Rajesh Jain said.

Markets, which are grappling with concerns over rising inflation and poor IIP numbers, were keenly looking at the IT giant's Q3 results and retreated on the outcome.

The benchmark Sensex opened the day on a subdued note plummeting by nearly 182 points to trade at 19,352.24 in the early trade.

Heavy-weight Infosys counter plunged by about 4 per cent and was instrumental in the overall Sensex fall.

Voicing Jain's opinion, SMC Capitals Strategist and Head of Research Jagannadham Thunuguntla said that Infosys numbers have not been up to the mark and turned out to be conservative.

But this may not be the end of the story for other IT majors, TCS is expected to outperform Infosys in its third quarter earnings, he added.

Software major TCS is set to announce its third quarter results on January 17, while Wipro will come out with its numbers on January 21.

Analysts also said that market was not expecting great surprises from IT companies as they remained under pressure due to appreciating rupee against the US dollar, and less number of working days in the December quarter.

Infosys was, however, expected to report at least 16-17 per cent quarter-on-quarter growth.

"The Q3 results of Infosys were marginally lower than our expectations. The management commentary reflects caution on the back of macro economic concerns. Thus, the Q4 and FY11 guidance are below market expectations. The underlying fundamentals remain strong, in our opinion," Kotak Securities Senior Vice President(PCG Research) Dipen Shah said.

Infosys is expecting revenues to be in the range of Rs 7,157-Rs 7,230 crore for the fourth quarter ended March, 2011.