We met the managements of Infy and Wipro today in Bangalore.
Infy management sounded more confident than their annual commentary during April’09 with co believing that it had put the ‘worst behind it’ with client behaviour returning to normalcy in terms of deal discussions. In contrast, Wipro maintained the status quo on it’s April’09 outlook saying that the worst was surely behind Indian offshore tech vendors, however returning to a high double digit growth rates (~15-20%+ YoY revenue growth rates) remained a daunting task for the sector. We note that some form of confidence from Indian techs could be emerging from the absence of any major upheavals/negative news from US and Europe which remain the key to decision making on cost saving outsourcing deals.
Cross currency benefits in the form of GBP, Euro strengths V/s US$ would aid the US$ revenues for Indian offshore players. (as indicated by us a few days ago in the mail: Cross currency: From Foes to Friends). We estimate Infy could gain by ~210 bps on guided revenues (US$ revenue outlook of US$ 1060-1080 mn for June’09) while Wipro could get a tailwind of ~150-160 bps. We do not rule out the possibility of an upgrade in Infy’s annual US$ revenue outlook as well on account of cross currency benefit, however would be surprised by any volumes led upgrades in revenue guidance.
Source www.emkayshare.com
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