Aug 5, 2008|
Software: 1QFY09 review
Amidst ongoing credit and economic crisis in the US and signs of slowdown in technology spending, Indian IT companies announced decent results for the first quarter of this fiscal. The undertone though remained cautious.
The combined topline of the 4 biggies (TCS, Infosys, Wipro and Satyam) grew by 6% QoQ, mainly on account of higher volume and stable pricing. Although these companies did not witness any pricing pressure during the quarter, sporadic issues related to the same (pricing) did crop up in management talks. Managements also indicated of some delays in decision making from the clients' side due to restructuring happening there in wake of the financial troubles faced by their companies.
Indian IT: Consolidated performance*
* Consolidation of results of Infosys, TCS, Satyam and Wipro
|Consolidated financial snapshot
|Operating profit (EBDITA)
|Operating profit margin (%)
|Profit before tax
|Equity in earning of affiliates
|Profit after tax/(loss)
|Net profit margin (%)
Coming on to the profitability, the same witnessed a 1% QoQ decline during the quarter. This can largely be attributed to higher salary and visa costs, which are generally first quarter phenomena. The depreciation of rupee against US dollars (rupee depreciated 8% against the US dollar in last 6 months) though pared some pressure off the margins. The consolidated bottomline grew by 5% QoQ during the quarter, impacted by a contraction in operating margins. Lower interest and tax expenses though aided this growth.
What to expect?
Although the IT sector registered a muted performance during 1QFY09, the picture looks satisfactory when one visualizes the same in the backdrop of financial crisis in the US, which has taken some sheen off technology spending and offshoring. This view was shared by managements of most of these companies. Going forward, the strategy of de-risking business from the US markets is expected to continue as companies focus their energies more in new geographies like the UK, Europe, Middle East and Asia Pacific. Caution will however remain the buzzword in the short to medium term.
More Views on News
Aug 2, 2017
A better than expected turnaround in performance results in a change in view.
Jul 27, 2017
Digital services drive growth for Wipro in 1QFY18.
Jul 14, 2017
Infosys starts FY18 on an encouraging note with a stable performance.
Aug 5, 2017
How to get exclusive insider recommendations from Ankit Shah.
Jul 14, 2017
TCS starts FY18 decently despite an adverse currency impact.
More Views on News
Aug 7, 2017
The data tells us quite a different story from the one the government is trying to project.
Aug 10, 2017
Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.
Aug 8, 2017
Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...
Aug 12, 2017
The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.
Aug 7, 2017
Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...
Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement. LEGAL DISCLAIMER:
Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here
. The performance data quoted represents past performance and does not guarantee future results.SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: firstname.lastname@example.org. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407