Infosys gain 2%, TCS down 2% ahead of Q2 results

Since July 14, post Q1FY17 results, Infosys was down 12%, while TCS fell 6%, against 0.50% rise in Sensex till yesterday.

Infosys was trading higher by 2.4% at Rs 1,054, while Tata Consultancy Services (TCS) was down 2.3% at Rs 2,326 on the BSE, ahead of their July- September (Q2F17) earnings. The S&P BSE Sensex was down 1.7% or 487 points at 27,594.

TCS is scheduled to announce its Q217 results on Thursday, October 13, 2016, after market hours. Infosys will announce the results for its second quarter ended September 30, 2016 on Friday, October 14, 2016 around 8.45 a.m.

Since July 14, 2016, post April-June (Q1FY17) results, Infosys was down 12%, while TCS fell 6%, against 0.50% rise in the benchmark index till yesterday.

According to analysts, the seasonal strength that leads to strongest sequential growth in the September quarter is hardly expected to play out this time, as slowness in spending by the Banking, Financial services and Insurance (BFSI) vertical weighs on the information technology (IT) industry.

Infosys may lower its guidance to 9.0%?10.5%, from 10.0?12.5% in Q1, on loss of the RBS deal and cross currency headwinds, said analysts at Edelweiss Securities in Q2 results preview.

“Revenue growth of 3.3% quarter on quarter (QoQ) in USD terms and 70 basis points (bps) currency impact (4.0% CC). Earnings before interest, tax, depreciation and amortization (EBITDA) margins to contract 110bps QoQ impacted by visa cost and wage hike. We expect Infosys to maintain 11.5?13.5% constant currency revenue growth guidance for FY17,” the brokerage firm said.

During the quarter, TCS cited growth concerns because of a sequential loss in momentum, led by weakness in BFSI discretionary spend in the US, said analysts at Motilal Oswal Securities.

“We believe the pullback in discretionary spending will weigh on margins too, derailing the company at least for FY17, from its targeted margin band of 26%-28%,” it added.