Mumbai: India’s two largest IT companies, Tata Consultancy Services Ltd and Infosys Technologies Ltd are likely to report smaller profit growth after the rupee gained the most in three decades.
Both the companies are likely to announce a 20-25% growth in profit, far less than the last four quarters, after an appreciating rupee devoured margins.
The rupee, which has appreciated 6.8% against the dollar in the first quarter of FY08, may advance another half a percent this year, further eroding the value of earnings from the US, the companies’ biggest market.
Profit in the IT sector as a whole has also been hit by higher wages, as companies are forced to compete to attract and retain talent.
The Bangalore-based Infosys, will kick of the results season on 11 July. Its shares have declined 9.3% this year on concerns of declining profit margins. The shares had gained nearly 50% last year. Similarly, shares of TCS, which will declare its quarterly results next week, declined 2.8% this year after a gain of 43% in 2006.
Bangalore-based Wipro Ltd., India’s third-biggest software company, is also likely to report a smaller rise in net income. The company declares its results on 19 July.