No slowdown signals from iGATE results
The December quarter results of iGATE Global Solutions reflect stable order flow from the US market.
By Bakul Chugan & Ranjit Shinde, TNN |
The December quarter results of iGATE Global Solutions reflect stable order flow from the US market. In the backdrop of a slowing US economy, analysts are eagerly awaiting third quarter results of IT exporters for cues on the demand scenario in the US, the largest IT outsourcer.
iGATE, which is the first IT company to declare its latest quarter results, has not shown any signs of slowing demand for IT outsourcing. It has bagged a few new clients during the quarter and expects to add few more in the next. Moreover, billing rates for offshore and onsite contracts have risen by 1.5-3.5%.
Based on client interactions, iGATE expects IT budgets in the US to remain either flat or show a marginal increase. However, the management has not ruled out a possibility of recession in the US market and expects IT budgets to take a hit.
During the December 2007 quarter, iGATE sales rose by 4.2% sequentially to Rs 209.3 crore. Operating profit rose even sharply by 15.8% to Rs 36.7 crore on account of better management of selling, general and administrative expenses and marginal improvement in onsite utilisation.
Net profit grew 26.4% to Rs 29 crore. It has reported increase in margins for the second straight quarter. Operating margin has expanded from 15.8% a quarter ago to 17.5%. The company expects it to increase it to over 20% by the end of FY09 by changing the mix of its employee pyramid.
Currently, the average years of experience at iGATE hovers at 3.9 years. The average is 2 years for the top IT companies. The company has filed for delisting from the Indian bourses. It has already garnered close to 94% shares, more than 90% which is the mandatory holding for delisting of shares.
iGATE, which is the first IT company to declare its latest quarter results, has not shown any signs of slowing demand for IT outsourcing. It has bagged a few new clients during the quarter and expects to add few more in the next. Moreover, billing rates for offshore and onsite contracts have risen by 1.5-3.5%.
Based on client interactions, iGATE expects IT budgets in the US to remain either flat or show a marginal increase. However, the management has not ruled out a possibility of recession in the US market and expects IT budgets to take a hit.
During the December 2007 quarter, iGATE sales rose by 4.2% sequentially to Rs 209.3 crore. Operating profit rose even sharply by 15.8% to Rs 36.7 crore on account of better management of selling, general and administrative expenses and marginal improvement in onsite utilisation.
Net profit grew 26.4% to Rs 29 crore. It has reported increase in margins for the second straight quarter. Operating margin has expanded from 15.8% a quarter ago to 17.5%. The company expects it to increase it to over 20% by the end of FY09 by changing the mix of its employee pyramid.
Currently, the average years of experience at iGATE hovers at 3.9 years. The average is 2 years for the top IT companies. The company has filed for delisting from the Indian bourses. It has already garnered close to 94% shares, more than 90% which is the mandatory holding for delisting of shares.
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