Weak rupee, demand uptick and improved macro to aid sector in upcoming earnings season. Observers to closely eye management comments on near-term outlook

With several key metrics showing signs of improvement, expectations from the Indian information technology (IT) sector are running high. After many quarters of lackluster performance, where only a few players posted healthy results, there are hopes that the upcoming earnings season may show an industry-wide growth.

Such hopes are being fueled mainly due to the depreciation of rupee, uptick and demand and improvement in macro economy.

Analysts estimate a 2-5% sequential rise in revenues for the large-size IT players in July-September, 2013, with hopes of a “blockbuster” performance by Tata Consultancy Services, and a market-leading growth numbers by Mindtree.

Signs of bullishness in management comments over the past few months are adding to experts’ beliefs that July-September would be a “strong” quarter for the industry, and the positive momentum may continue going forward.

Among other factors, the improvement in demand over the past few months is seen putting the IT sector in a “sweet spot”. With economic growth and stability returning in the key markets–US and UK, most industry observers have said that clients may increase their spending on IT in 2013.

“Actual spending by clients is now growing, as an outcome of which, there’s an increase in work volumes coming to India,” Sudin Apte, chief executive officer & research director, Offshore Insights said. “I believe that in July-September we would have started seeing some progress and it will ramp up over the coming quarters,” he said.

Two weeks ago, Tata Consultancy Services CEO N Chandrasekharan, who has remained bullish in his growth outlook and has maintained that FY14 will be a better year for business than FY13, reiterated that the company is witnessing initial signs of global demand picking up.

Source: Business Standard

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