IT
Stocks Outlook for the week – 05 to 09.01.2015
Stocks of information technology companies are likely to show some
volatility and nervousness in the coming week with Infosys Ltd slated to come out with its
numbers on Friday.
The previous week saw IT stocks make smart gains, supported by a
buoyant market. The stocks had seen limited gains in previous weeks despite a sharply
depreciating rupee due to the overall choppiness of the Indian market. Most IT stocks gained 3% last
week against a 2.3% rise in broader benchmarks.
Infosys' third-quarter results, some of which have already hit the
market, will impact the stock, as well those of its peers like Tata Consultancy Services Ltd and
Wipro Ltd, which will report their numbers later. As expected, estimate companies, including
Infosys and TCS, to report modest dollar revenue growth due to the impact of rising dollar and
the seasonal weakness seen in the holiday quarter.
We forecast sequential constant currency revenue growth of 2.8% (for
Infosys), USD revenue growth of 1.2%, flat EBIT margin and net income on YoY basis. Last
year, Infosys had reported a 1.7% jump in its revenue for the third quarter in dollar terms.
However, it being the third quarter, commentary about 2015 spending
will also have an equally big impact on stock prices.
