Indian IT growth remains uncertain in spite of meeting expectations with their third quarter results.
After Infosys cut its dollar growth guidance last week, TCS and HCL did try and sound a bit more positive. But the indsutry sentiment reflected looming macro-economic uncertainty ahead.
Going by their earnings report card, the three IT majors TCS, Infosys and HCL have delivered in a traditionally weak third quarter. However, it is the 2012 growth outlook that is drawing mixed signals.
Even a usually positive-sounding TCS sounded a bit cautious on discretionary spending. N Chandrasekaran, CEO, TCS said that of a sample of 130 projects, 50 per cent of them have seen delays in Q3.
“Either they got delayed in the same quarter in Q3, or some got postponed to q4. So that ramp up is going to show a lag effect in volumes,” N Chandrasekaran said.
However the company remained confident an overall growth.
“I am quite happy about the fact that majority of our clients are finalizing their budgets. That is a good sign as even in the most optimistic year, you may not have all your clients increasing their budgets,” he added.
A comparative company analysis of the Q3 performance of volumes and margins shows that volume growth for TCS in Q3 came in below expectation at 3.2 per cent. Infosys saw 3.1 per cent growth and HCL reported a strong volume growth of 4.9 per cent.
Also Earnings Before Interest, Depreciation, Taxation and Amortization (EBIDTA) margins improved marginally for Infosys to 31.7 per cent. TCS grew it to 29.2 per cent and HCL saw margins go up to 15.8 per cent.
TCS posted strong growth in confidence-hit Europe at 18.1 per cent versus 16.8 per cent posted by Infosys. HCL grew by 6.3 per cent in Europe.
Analysts say investors' confidence in the IT sector will be hit due to the cautious growth outlook.
According to Rajat Rajgarhia, Head - Research, Motilal Oswal Securities, Infosys’ commentary reflects slowdown in their business.
"Although TCS maintained the same momentum, there were words of caution, which have not comforted the investors," he added.
All eyes will now be on Wipro to shed more light on the growth outlook ahead. It will be announcing its results on Friday.
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