Q4FY11E expectations
· Muted Topline: Q4 seasonality & new project commencements from Feb’11 to impact vol. growth (expect ~3-4% QoQ growth) with a stable pricing resulting in rev growth of ~4-5% QoQ (in INR terms).
· Mixed EBITDA: Ex. Wipro, margins would be impacted by ~40- 60 bps QoQ due to lower utilisation & company specific events (higher S&M costs for TCS/ Tsunami in Japan for HCL Tech etc.)
· Lower PAT: Lower forex gain vs. Q3FY11 to impact PAT performance
· Other factors: BFSI & Retail among verticals lead the growth whereas ES/C* & IMS# continue to drive growth among services
Other operating trends to watch: Management direction on CY11E IT spend, visibility on discretionary spend, FY12E gross hires, wage inflation and supply challenges
Best Bets: TCS and Infosys remain BEST BETS driven by high growth in core BFSI vertical, market share gains in large deals/ client mining, pricing power from increase in Enterprise Solutions revenues, power focus on non-linear revenues and better placed to manage supply challenges.
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