How much will Infosys raise guidance by?

Information technology companies are expected to post  a good set of numbers, mostly as per Street expectations.

Volume growth is seen at 5-6% in dollar terms for top companies, while pricing would be flat, said Manoj Singla, Rumit Dugar and Udit Garg, analysts with Religare Securities.

Cross-currency shifts are likely to hurt the numbers by 1-1.5%, they said in a note.

Look out for comments on growth outlook, pricing, attrition trends, supply-side constraints and mega deal wins, analysts said.

Business has recovered, but the macro outlook remains challenging, said Surendra Goyal and Vishal Agarwal of Citigroup Global Markets in a note last week.

While the rupee fall means about 3-5% rise in rupee earnings guidance for Infosys, European fears would limit volume growth, the Religare analysts said.

All eyes will be on the trend expected in the second quarter, which is seasonally the strongest because it has the maximum number of billing days, and, of course, whether there are guidance upgrades.

Yogesh Aggarwal and Atul Agrawal, analysts with HSBC Securities and Capital Markets, said in a note that pent-up demand and an uptick in discretionary projects suggest accelerated growth.
On Infosys guidance, they expect it to be revised upwards, helped by a stronger demand environment and favourable rupee compared with the fourth quarter last year. But “we believe the revision is likely to remain lower than the already-raised consensus expectations. Albeit modest, we expect 2-4% upward earnings revision in the consensus FY11/12 estimates,” they said.

They see both Infosys’ and TCS’ revenues growing around 6% in constant currency terms spurred by volumes.

But Infy’s Ebidta margin is seen slipping 170 bps due to wage inflation.