Export-dependent software companies are set to report a strong sequential revenue growth in the range of 2.6 to 6 per cent in the seasonally weak December quarter, according to a report.
The December 2021 quarter earnings season will begin later this week or early next week with industry leaders TCS and Infosys announcing their numbers.
In a report released on Monday, Kotak Institutional Equities forecast a strong 2.6 to 6 per cent sequential revenue growth in the seasonally weak December 2021 quarter.
The report, which however, did not offer an annualised number, also said the picture is not rosy on EPS (earnings per share) front as it sees a fall of 15 per cent for some and a growth of 11 per cent for others.
According to the report, HCL, Wipro and Tech Mahindra will lead the growth chart among large-caps and LT Infotech (LTI) among mid-caps of the industry that has seen strong headcount addition with higher fresher intake, amid high attrition on one hand and muted total new contracts on the other but strong actual deal-making. December is a seasonally lean period due to furloughs. Despite the impact of furloughs, the report sees strong revenue growth led by high discretionary and continuing transformation spending. While Wipro, Tech Mahindra and HCL will likely deliver 4.5 per cent growth in constant currency terms, Infosys is likely to login in a 3.7 per cent topline (revenue) growth and industry leader TCS a modest 2.6 per cent on-quarter growth, the brokerage said. Mid-tier companies are likely to deliver revenue growth of 5-6 per cent in constant currency terms, and healthy overall growth of 20-34 per cent annualised, it added. The export-dependent industry will have a cross-currency headwind of 20-90 bps due to a rise in the dollar against the pound, euro and the Australian dollar.
However, EPS growth will be weak on-year with Wipro's login in muted number, HCL reporting decline, while Infosys offering 6 per cent, and TCS and Tech Mahindra delivering in low-teens.