Despite uncertainty over peripheral economies of Europe and poor unemployment recovery in the US, the demand environment for mega Indian IT services firms remain robust, brokerage houses have said. The top three exporters are well poised to clock revenue growth in the range of 20% or more in the year ending March 2011.
TCS is witnessing broadbased traction, Infosys can beat its own guidance again and Wipro can arrest its under performance of the previous quarters compared to its peers, analysts hoped.
Motilal Oswal said the TCS management had hinted at the possibility of higher allocation by its large clients in their 2011 budgets. The company expects to clock a growth of more than 20% over the next three years. ?The expectation of significant growth in FY12 is based on the initial budget outlook from existing large clients and does not factor in upsides from large transformational deals. This is a key positive,? the brokerage house said in a report.
Volume growth, however, might witness a 3-3.5% moderation in the seasonally slow third quarter from 9.5% in Q2. FY11 hiring is likely to far exceed 50,000, as campus recruitment remained strong this quarter, the report said.
Motilal Oswal has upgraded the firm?s dollar revenue growth estimates to 29.3%, up 2.4%, for FY11 and to 25.3%, up 2.6%, for FY12. It has also upgraded EPS estimates to Rs 43.1, up 1.9% for FY11 and to Rs 51.1, up 1% for FY12.
In another report, Prabhudas Lilladher said the management of Infosys Technologies had highlighted an early indication of positive IT budgets ? 1%t o 2% higher than the previous year. Budgets are likely to be finalised by January-end. ?Infosys has increased its focus on Fortune-500/Global-1000 clients, where it could increase the wallet-share. Lower attrition in October-November has eased up wage inflation pressure. Moreover, the wage hike for FY12 is likely to be lower than FY11,? the report stated. The brokerage house expects Infy to clock revenue growth of 20.3% in FY11 and EPS growth of 11.8%.
Analysts also expect Wipro to play catch up ? the firm underperformed in the recent quarters because of supply under-preparedness.
The market had rebounded quickly and the firm shied away from low margin services. ?The management has expressed confidence to match the growth of its peers, and continue to grow in FY12 at a rate similar/better than FY11 dollar revenue growth. The company expressed confidence in bagging a couple of large deals in the near term, while the deal pipeline continues to remain strong,? Motilal Oswal noted. The brokerage firm has revised its US dollar revenue growth estimates upwards to 19.1%, up 1.1% for FY11 and to 22.6%, up 3.3% for FY12.