TCS, Infosys trade firm ahead of Q3 results

Shares of Tata Consultancy Services (TCS) and Infosys were trading firm on the National Stock Exchange (NSE) ahead of their October-December results (Q3FY17).

Infosys was up nearly 3% at Rs 997, while TCS up 1% at Rs 2,345 on the NSE, as compared to 1.56% rise in Nifty IT index and 0.26% gain in the Nifty 50 index at 03:00 pm.

TCS is schedule to announce its Q3 results today, on January 12, 2017, and Infosys will declare its Q3 earnings on Friday, January 13.

Q3 is typically a soft quarter for information technology (IT) sector due to furloughs and holiday season. The quarter under review will witness further weakness due to sharp cross currency (CC) pain (GBP/Euro/Yen are down 5.3%/3.3%/6.2% versus USD).

Analysts at Edelweiss Securities expects earnings before interest, tax, depreciation and amortization (EBITDA) margins of Infosys and TCS to improve by 60 basis points and 50 basis points, respectively quarter on quarter gaining from operational efficiency and pyramid rationalization.

“While 3QFY17 is expected to be soft, we reiterate the fact that lead indicators are turning positive as reflected in the improvement in US economy, particularly US financials, consumer confidence index, retail sales, new home sales, employment etc. If the trajectory sustains, there could be an upside to our and consensus revenue growth estimates of 8%-10% for the next two years. Any severe than expected action on, the immigration policy front remains the key risk,” analysts at Antique Stock Broking said in Q3 results preview.

Analysts at JM Financial Institutional Securities expects Infosys to leave its FY17 CC revenue growth guidance unchanged at 8-9% though reported currency guidance could be adjusted for the sharp cross-currency move.

Among the other individual stocks, Tech Mahindra, HCL Technologies and Wipro were up in the range of 1% to 2% on the NSE.