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Indian IT companies under pressure

Bangalore, Apr 22 (): Indian IT company stocks are under pressure and India’s third-largest software services provider Wipro took a battering with 11.02% in early morning trade today.

The sales projection forecast for the June quarter was weak. Wipro posted a profit which was much above the market expectations. The investors were disappointed when the company put the revenue growth very low for the June quarter.

In April, Infosys posted a projection of 6% growth in the coming year. This has disappointed investors. Nasscom had put IT growth at 14% but IT companies seem to be lagging behind.

Tata Consultancy Ltd (TCS) and HCL technologies posted higher profits and put the growth rate to exceed Nasscom targeted figure. Investors are doubtful whether T K Kurian, CEO of Wipro plans to turn around the fortunes of the company are showing results. A $1.61 billion revenue forecast for the June ending quarter has weakened the company standing with investors.

Wipro justifies that usually June sees poor business since the Indian and Middle East clients do a little business at the start of fiscal of 2014. However, a 9% growth in this period expected of it is something that needs to be appreciated by investors, says the company. It also said that some deals that were to be signed in March have been pushed to June.

Investors who stayed with the company for two years and banking on the turnaround story are now losing hope. Wipro’s shares dropped 9.36% to Rs. 334.15 today on BSE. The exchange’s benchmark index rose 0.11%.

Kurian feels investors are v interested in EPS (earnings per share) growth. For EPS growth, topline has to grow and the other is operating expenses. Wipro topline is remaining static where it was two years ago. Operating expenses increased because it wanted to create enough space to manage sales and marketing expenses, but it is over invested. Gross margin shot up by 1.5% which was spent on sales and marketing.