With Infosys celebrating its 25th year, and the buzz about a possible bonus issue or stock split by cash-rich Tata Consultancy Services (TCS) getting louder and louder, the street is waiting to uncork the bubble when the tech titans announce their third quarter earnings next week. (Jan 8-14)

The additional pressure of increased wage costs is a matter of concern, a sober rupee, an uptick in business in niche sectors and better billing rates are expected to help tech majors to keep their date with their earning guidance given during the last quarter.

Market analysts feel that Infosys Technologies, Wipro, Satyam and Tata Consultancy Services (TCS) would maintain an average quarter-on-quarter growth of 8% to 9% during the third quarter.

“Infosys had announced that a salary hike implemented in an earlier quarter would reflect on the company’s Q3 performance. While this cost would have an impact on their margins, rupee depreciation and better pricing with new clients would have compensated for it,” a Mumbai-based IT analyst told FE.

During the third quarter, the dollar was valued at an average rate of Rs 45, as compared to around Rs 43 during the previous quarter. “This would definitely add to the bottomline of companies,” another analyst with a local brokerage house said.

Delphin Analytics head, V Vijay feels that, Infosys would grow by around 35% this fiscal, much in line with what they had projected. “In the cases of Wipro and Satyam, growth in package implementation businesses during the quarter would have boosted their revenue. The industry is witnessing a strong growth in this segment and markets especially in the Gulf are looking up,” he said.

The analysts, however, feel that the acquisitions made by the frontline companies during the last quarter would not reflect in their third quarter numbers. Wipro was on an acquisition mode during the past quarter and the company took over NewLogic of Australia for $56 million and mPower for $28 million during the period. Apart from forming a joint venture with SBI, TCS also made two acquisitions during the third quarter, including the $26 million buyout of banking company Financial Network Services (FNS) and Chile-based BPO, Comicrom for $23 million.

“The acquisitions will not have any immediate impact on the companies’ margins. Though some impact may be seen, it would be insignificant and would be more pronounced in the coming quarters,” said another analyst.

Market is keenly watching TCS, which is sitting on a cash reserves to the tune of over $825 million, for a likely announcement of a bonus issue or a stock split. Similarly, market is expecting something extra from Infosys, which would celebrate its 25th anniversary this year.

( www.financialexpress.com)