Big Indian IT firms to post 102% profit growth

MUMBAI: Securities firm, Dresdner Kleinwort Wasserstein said it expects four

large Indian software firms to post 102 per cent growth in net profit for the

January-March fourth quarter over the year-ago. The firms - Infosys

Technologies, Wipro, Satyam Computer Services and HCL Technologies - are likely

to see quarter-on-quarter earnings rise four per cent, the securities firm said

in a reported dated March 30.

It estimated sales to grow 73 per cent compared to the year-ago and nine per

cent over the previous quarter. Indian software companies start reporting their

January-March 2001 results from next week.

However, Dresdner said it expected several medium sized companies to show

substantially lower earnings growth, but said some of the better managed firms

such as Hughes Software and Digital India may unveil good earnings. It said it

maintained its ‘Neutral’ rating on the sector while its top picks were

Infosys, Satyam and Hughes Software.

The market is unlikely to react to the results per se, it said, adding that

the numbers were likely to come under close scrutiny for signs of strength or

weakness. "All operating parameters like billing rates, utilization levels,

receivables, manpower and new client additions will be the focus," it said.

Infosys was likely to show 123 percent year-on-year growth for the quarter

and 16 per cent growth over the previous quarter, while Satyam would grow 109

per cent over the previous year and five percent over the previous quarter,

Dredsner said. It said Wipro's earnings could rise 94 per cent over the year-ago

period but may be flat compared to the October-December quarter.

"This is because of salary increases for its R&D employees who

constitute about 50 per cent of its software division," it said.

"However, we could expect some positive surprise on earnings if Nortel's 18

per cent rate revision effective mid-2000 is accounted for this quarter,"

it said. Dresdner said HCL Technologies' earnings could dip four percent over

the October-December quarter as non-operating income may be lower considering

some one-time income booked in the previous quarter.

(C) Reuters Limited 2001.