Infosys Quarter Results Beat Industry Estimates , raises Revenue Guidance
The year has started on a promising note as far as financial numbers are considered.Infosys, the IT bellwether beat delivered better then expected third quarter results which bought a short term cheer to the Indian Stock Markets.
Infosys reported a 2.7% rise in consolidated net profit for the third quarter ended December 31, 2009 (Q3FY10) at Rs 1,582 crore when compared with Rs 1,540 crore in the previous quarter of the current fiscal (Q2FY10)
The Indian Stock Markets especially the BSE IT index rejoiced and rose 3.84 per cent to a 52-week high of 5410.9 on Wednesday after the results were announced.The numbers reported were significant for various reasons.The Third quarter has lesser working days and the rupee has been appreciating quite a bit against the dollar.Other IT stocks like TCS, WIPRO rose quite a bit.
However, Infosys which is considered a trendsetter has also raised it revenue guidance for the year 2010.The guidance is cautious yet signifies that the worse might be over for the IT sector in India.
The company expects revenue growth of 3.6-3.8% for FY10 and 1.8-2% in dollar terms on a annual basis. Infosys has also raised the EPS( Earnings Per Share) to 107 from 100 for FY10.So much so, that the industry analysts are betting on 18 to 20% growth for 2011 fiscal.
What are your thoughts on the IT stocks after the Infosys quarter results? Do you think that other IT giants will report positive numbers and boost the Sensex?
You may also want to help Arun with your Stock Market predictions for 2010
The market outlooks looks positive but there are other factors which might play spoil sport in seeing a strong market going forward.More details later in the post.
Industry Production at two year high, Food Inflation continues to rise
That’s one good and bad news rolled into one :-) Industrial Production Index(IIP) touched a 2 year high at 11.7% for November.This is an upbeat news and signifies that the economic recovery is well on course.The consumer durables sector was the top performer with a stupendous 37% growth. The Fiscal Stimulus provided by the government in the form of lower excise duty,service tax etc. has seemed to help the CPG and the manufacturing sector by increasing the demand.
This also suggests that the stimulus may not be taken away too soon as the government has been speculating.Government has seen the benefits of the stimulus in the form of promising IIP numbers but the finance ministries problems seem far from over.
WPI Inflation rose up to 7.3% for the month of December which is way ahead from Government’s expectation.The sharp rise from 4.78% in November presents a worrisome picture.The surprising increase might see the RBI tightening the fiscal policies which were relaxed to a great extent last year in the wake of a slowdown.The government had predicted a 6-6.5% rate of Inflation by March, whereas the December figures have beaten their estimates well in advance.
The finance minister had been hinting at taking some stern measure by tightening the monetary policies.Rate hikes seem to be inevitable now with an immediate increase in CRR rates as per the industry analysts.This might put the government into a Catch-22 inflation situation where the industrial sector is expecting the existing rates to stay to ensure that the country remains steady on its path to economic recovery.
Now, that’s some situation the finance department will have to handle. Fiscal stimulus and relaxed rates seemed to have helped India chalk out a path to recovery,but for the industrial sector to stay on course, any changes to the existing scenario might prove a big hurdle.However, the rising inflation is one monster which if not tamed early might turn into a catastrophically huge problem later.
What is your take? Do you think the government should continue with the stimulus and rate cuts to help the industrial sector or a rate hike is inevitable to control the inflation?