With the increase in IT demand and depreciation of the US dollar, it is expected that Indian software companies will post higher revenues in the second quarter. Analysts from ICICI Securities think that Infosys, TCS, Wipro, and HCL Technologies will post a volume growth rate of five to seven percent.
Volume growth can be attributed to the 1.8 percent rupee depreciation against the US dollar. Meanwhile, US dollar depreciated by 3.9 percent against British pound, 1.5 percent against Euro, and 2.5 percent against the Australian dollar.
"Infosys to post expansion in its EBIT (earnings before interest and tax or operating margin) margins by 175 bps (100 basis points is equal to one per cent) QoQ as wage hikes are behind, the periodic visa cost will be lower, rupee depreciation to the tune of two per cent will cushion margins by 70 bps and higher offshore efforts will aid them," said Srishti Anand of Angel Broking. Wipro is expected to post a 60-bps expansion, while HCL Tech’s margins are likely to decline by 239 bps quarter-on-quarter primarily due to salary increases for Q2 FY2011.