Analysts expect IT firms to report muted revenue growth for Oct.-Dec. quarter

Analysts expect IT firms to report muted revenue growth for Oct.-Dec. quarterIndian information technology services firms are expected to report muted quarter on quarter growth of just 1-3 per cent in the three months to December due to delays in new outsourcing projects in the US and Europe.

Super storm Sandy that ravaged the US in October 2012 is also expected to have a considerable impact on the revenues of the Indian outsourcing firms.

Infosys and HCL will likely report a fall in their Ebitda (earnings before interest, taxes, depreciation & amortization) margins. Ebitda is a major measure of to gauge profitability. Brokerage India Infoline Ltd expects Infosys's Ebitda margins to fall 120 bps to 27.9 per cent in the three months to December from the previous quarter.

Separately, Angel Broking analyst Ankita Somani said, "We expect the EBITDA margin of Infosys to decline by 97 bps QoQ to 28.1 per cent, because of moderate wage hike of 6 per cent to the offshore employee base and 2-3 per cent to the onsite employee base."

HCL Tech is also expected to suffer a decline of 179 bps in its Ebitda margin to 20.4 per cent in the quarter under review, mainly due to increases in wages during the quarter.

According to Nomura, TCS, HCL Tech, Infosys and Wipro Ltd are expected to report overall dollar revenue growth of 3.1 per cent, 2.7 per cent, 1.9 per cent and 2 per cent, respectively.

IT firms will start reporting their third quarter financial results with Infosys on 11th of January.