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Infosys Earnings On Thursday. What To Watch Out For On IT Sector

Infosys, in the December quarter, reported a better-than-expected net profit of Rs. 3,708 crore but the outsourcer tweaked its guidance for the full year.
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Infosys Earnings On Thursday. What To Watch Out For On IT Sector
India's second largest IT company Infosys will be declaring its fourth quarter and FY16-17 full year earnings on Thursday. This earnings will be closely watched by investors as the Indian IT sector is going through a tumultuous phase in the wake of Trump Administration tightening H-1B visa norms in order. The $150 billion Indian IT industry which comprises of companies like Tata Consultancy Services, HCL Technologies and Wipro among other draws a sizeable chunk of its revenues from the United States.

Infosys, in the December quarter, reported a better-than-expected net profit of Rs. 3,708 crore but the outsourcer tweaked its guidance for the full year. Meanwhile, India's biggest outsourcer TCS reported a net profit of Rs. 6,778 crore in October to December quarter, in-line with the market's estimates.

Analysts at IDBI Capital Markets expect the IT sector to continue to face headwinds from muted global macros, risks of adverse visa rules in the US and transition of existing business to new technologies.

For Infosys, IDBI Capital Market & Securities expect constant currency (CC) revenue growth of 7-10 per cent and earnings before income and tax (EBIT) margin of 25 per cent.

"For Q4FY17, we forecast constant currency (CC) organic growth to remain soft as generally in Q4. M&A would aid growth and so would cross-currency movement. We forecast HCL Technologies to outperform with US dollar revenue growth of 4.3 per cent (QoQ). 

We forecast Tata Consultancy Services (TCS) to continue with its excellent profitability management and expect it to be only company to see improvement in EBIT margin," says IDBI Capital Market & Securities in a research report.

 

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