Expect Infosys to improve dollar revenue growth guidance in H2: Basudeb Banerjee, Quant Broking

In and interview with ET Now, Basudeb Banerjee, Research Analyst, Quant Broking Pvt Ltd, shares his views on Infosys’ Q1 performance. Excerpts:


ET Now: They have maintained their guidance 6% to 10%. Are you happy or is it something that you expected?

Basudeb Banerjee: Yes, we were factoring in 8.4% constant currency dollar revenue growth in FY14. So broadly in terms of revenue per se in dollar terms we will keep our estimates unchanged. So at least there is no negative reaction or say negative outcome on the results because of the guidance per se. Broadly the street should be taking it positively that Infy has kept its revenue guidance unchanged after a couple of quarters of cutting down the FY14 estimates.

ET Now: Let us look at the bright side and the bright side here is that they have managed to grow in a tough environment, they have indicated that they will continue to grow even though the environment is challenging. The real effects of restructuring after Mr. Narayana Murthy’s return will only kick in in the second half of this financial year. So do you think in the second half of this financial year Infosys really could surprise everyone on the upside?

Basudeb Banerjee: As you said one can look at two aspects in line with this thing. One is if you look at various US macro data in terms of unemployment, housing data, even the Nasdaq, Dow making new highs and the very fact that Ben Bernanke is thinking of tapering of the QE, so these are all indicating that the macros are improving and definitely all the major IT players are depending upon the US economy and discretionary spending. So this gradual improvement should definitely lead to better IT spending and off shoring. On the other side, as Mr. Narayana Murthy said that he will definitely start focusing upon the ADM and infra segments rather than focusing upon consulting segment so much at current juncture. So if you look at HCL Tech and TCS, primarily the volume growth is led by ADM and infra where Infy was lagging significantly. So if the focus shifts to those two high growth horizontals along with the US economic improvement, definitely I would not be surprised if Infy improves the dollar revenue growth guidance in the second half.