IT stocks nudge higher after strong revenue growth guidance from Infosys

capital market | Mumbai | ,

Six IT stocks gained 0.68% to 6.74% at 15:17 IST on BSE after IT major Infosys issued a strong revenue growth guidance for the year ending 31 March 2017.

Persistent Systems (up 6.74% at Rs 772.50), Oracle Financial Services Software (up 2.45% at Rs 3,641.45), HCL Technologies (up 1.87% at Rs 853.60), Tech Mahindra (up 1.44% at Rs 477.50) and Wipro (up 0.68% at Rs 588.55) edged higher.

The S&P BSE IT index was currently up 336.28 points or 2.98% at 11,619.46. It outperformed the Sensex which was up 199.14 points or 0.78% at 25,825.89.

The S&P BSE IT index had outperformed the market over the past one month till 13 April 2016, rising 4.2% compared with Sensex's 3.68% rise. The index had also outperformed the market in past one quarter, gaining 5.78% as against Sensex's 3.11% rise.

Shares of IT major Infosys jumped after the company forecast strong revenue growth for the year ending 31 March 2017 (FY 2017) at the time of announcement of its Q4 March 2016 results on Friday, 15 April 2016, when the stock market was closed for a holiday. The stock was up 5.58% at Rs 1,237.50. The stock hit a high of Rs 1,267.90 in intraday trade so far, which is also record high for the counter. The stock hit a low of Rs 1,234.55 so far during the day. Infosys expects revenue growth of 11.8%-13.8% for FY 2017 in US dollar terms. In constant currency terms, the company has forecast 11.5%-13.5% growth in revenue for FY 2017. Infosys' revenue growth forecast is higher than 10% to 12% growth for the IT outsourcing sector for FY 2017 forecast by IT industry body National Association of Software and Services Companies (Nasscom) in February this year. Infosys has forecast 12.7%-14.7% growth in revenue in rupee terms for FY 2017 based on rupee dollar exchange rate of 66.26 as on 31 March 2016.

Infosys' consolidated net profit rose 3.8% to Rs 3597 crore on 4.1% growth in revenue to Rs 16550 crore in Q4 March 2016 over Q3 December 2015. The results are as per International Financial Reporting Standards (IFRS). Infosys said that the employee attrition reduced further in Q4 March 2016. On annualized basis, the employee attrition rate declined to 17.3% in Q4 March 2016 from 18.1% in Q3 December 2015.

After the strong revenue growth guidance for FY 2017, Infosys' ADR jumped 8.4% to settle at $20 on the New York Stock Exchange on Friday, 15 April 2016.

IT major TCS dropped 0.09% at Rs 2,521 after a US court reportedly slapped nearly $1 billion penalty on the company for allegedly stealing information related to US-based Epic Systems' healthcare software. TCS, however, denied the charges and said it would appeal. In a statement issued on Saturday, 16 April 2016, TCS said that the jury's verdict on liability and damages was unexpected, as the company believes it is unsupported by the evidence presented during the trial. The company added that it did not misuse or derive any benefit from downloaded documents from Epic System's user-web portal. TCS said it plans to defend its position vigorously in appeals to higher courts. The company said it appreciates the trial judge's announcement from the bench that he is almost certain he will reduce the damages award. The jury verdict will not have any impact on the company's Q4 March 2016 and FY 2016 financial results, TCS said. TCS is set to announce its Q4 March 2016 results today, 18 April 2016.

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