Indian IT firms are likely to post muted revenue growth in the December-quarter, affected by Chennai-floods and more than expected furloughs in the US and European markets, analysts said.
Indian IT firms are likely to post muted revenue growth in the December-quarter, affected by Chennai-floods and more than expected furloughs in the US and European markets, analysts said.
The October-December period is usually a weak quarter for Indian IT players as business is impacted by low volume growth on account of Christmas and New Year holidays and furloughs in the US and Europe.
The two markets account for about 85 per cent of their revenues.
“Weak Q3 seasonality for IT Services is compounded this year by higher-than-expected furloughs, cross-currency movement and impa-ct from Chennai floods affecting delivery for five days, and high abs-enteeism in the following few days,” Motilal Oswal said in a report.
Companies like TCS, Wipro, Hexaware and Mphasis have already issued warnings that their revenues and margins for the third quarter of 2015-16 would be impacted by lower-than-expected earnings as the downpour and floods in Chennai and coastal areas of Tamil Nadu hit the operations of various IT firms.
TCS will kickstart the quarterly earnings season for IT firms from January 12, followed by Infosys (January 14), Wipro (January 18) and HCL Technologies (January 19).
“We expect muted gro-wth. Large-caps are likely to report tepid dollar revenue growth of 0.3 to 1.1 per cent quarter-on- quarter with Chennai floods exacerbating the seasonal weakness in Q3, particularly for TCS and Wipro,” Religare said.
