Rising rupee to plague IT cos Q3 nos: Experts

Grappling with the impact of appreciating rupee, the third quarter numbers of IT companies are unlikely to bring any "great surprises" for the street, feel experts.

Market is curiously waiting for a boost from Infosys Technologies and TCS, when these two honchos will announce their respective October-December quarter earnings on January 13 and 17, respectively.

"With the rupee appreciating against dollar and fewer billing days in view of the holidays in the December quarter, the market is not expecting any blockbuster performance from the IT companies," SMC Capitals Strategist and Head of Research Jagannathan Thunuguntla said.

Brokerage houses are expecting a revenue growth in a range of 2.4-6 per cent from the frontline IT companies including Infosys, TCS and Wipro, which would be largely driven by volumes.

"Volumes for the blue chip IT companies are expected to rise by 5-8 per cent, which is impressive in the backdrop of a seasonally soft quarter. While cross currency volatility should help, the appreciation of rupee against the dollar and GBP (Pound) should set off those gains," a report by Kotak Securities said.

It also has hopes of an upward revision of guidance by bellwether Infosys on the back of a supportive macro scenario.

However, it said that the fourth quarter growth guidance may be conservative due to lack of complete information on calendar year 2011's client spending budgets, rupee

appreciation and the still hazy scenario in Europe.Experts feel that the performance of most of the IT firms will be in-line with their respective numbers in the second quarter of the fiscal.

"Barring the impact of fewer working days during the December quarter, performance is expected to be similar to Q2FY11. The trend of stable pricing and high attrition will remain unchanged.

"While broadening of the employee pyramid (salaries) will be favourable, rupee appreciation against dollar and pound will be a margin headwind," Edelweiss said in a note.

Commenting on the performance of mid-cap IT stocks, marketmen said the large caps are expected to outperform them, as they are better equipped to counter the impact of appreciating rupee, high attrition and any potential economic slowdown globally.