IT sector awaits muted results season: analysts

The upcoming results season, to be kicked off by technology giant Infosys on Friday, may not bring the much-needed cheer to the IT sector amid uncertainty in the business environment for Indian outsourcing companies.

IT bellwether Infosys will announce its fourth quarter results on April 13, while country's largest software exporter TCS will release its financial numbers on April 23. Wipro and other leading IT firms are yet to disclose the dates for their respective financial results.

"Slower growth in discretionary spends and continued delays in spending decisions will also impede revenue growth," Kotak Securities Head (Fundamental Research) Dipen Shah said in a preview report on the IT sector results.

"We expect companies under our coverage to report a sequential revenue growth of about 1.3%, driven by higher volumes but impacted by currency fluctuations," he added.

Indian IT companies had got a major boost from the sharp rupee depreciation in the third quarter. However, in the January-March quarter, the rupee appreciated by about 1%, which would negatively impact the rupee revenue growth of IT companies and operating margins, analysts at Angel Broking report said in a report.

The revenue growth for the fourth quarter is expected to be muted on quarter-on-quarter basis for the tier-I IT companies due to rupee appreciation against the dollar, they noted.

Typically, the January-March quarter is a soft quarter for software service providers as this is a quarter where client budgets are normally finalised and order flow turns stronger in the April-June quarter.

"I don't have very high hopes for the fourth quarter from all companies compared to the previous quarter. Traditionally, Q4 results are not great compared to the third quarter," Gartner Principal Analyst Arup Roy said.

Mid-sized firm Patni, which was acquired by US-based iGate last year and will soon be delisted from Indian bourses, announced its results yesterday.

It posted a decline of 13.56% in its standalone net profit at Rs 152.77 crore for the quarter ended March 31, while standalone income during the period increased marginally at Rs 547.49 crore.