IT results lend a dash of dazzle to stocks

Even when viewed by the millimeter, the tech rally is expected to last. The week’s results foreclose what R Venkatesan, IT sector analyst with the National Council for Applied Economic Research reiterates as necessary for long-term growth of the industry. ‘‘Since I primarily look at the IT sector from a long-term view, it seems the last few years investments into IT infrastructure, both public and private, will continue paying dividends in the long term,’’ he explained.

That is why, despite software mid-cap CMC loosing ground, sentiments are not hurt. ‘‘CMC lost some ground on the stock exchange in intital hours after the results, but if you look at its consolidated performance in the September quarter, it posted a 92 per cent jump in net profits,’’ says a sector specialist with a leading analyst firm in Mumbai.

But for most IT companies, there were only dazzling gains, which, say analysts, are a result of new contracts signed with international heavyweights in verticals such as banking, insurance, software, telecom, retail, finance and transportation.

Software Infosys bellwethers Infosys Technologies, Wipro and Satyam, for instance, rallied after Patni Computers, HCL Infosys, HCL Tech, iFlex and Polaris over the last week. Nearly all reported signinifcant additions in customers as well as workforce.

Aztec Software for instance, posted net profit hike of 140 per cent, added four new customers in the quarter, raised its headcount (to 330 from 240) and also expanded its sales team.

Even tech major Infosys, which beat market expectations with Q2 net profits leaping to Rs 447.37 crore, up 48.64 per cent from last year, added 32 new clients and 5,010 new employees over the quarter.

At TCS, the best part of the results could well be that its revenues from high-value segments such as engineering, value added services and consultancy increased substantially.

On a year-on-year basis, TCS’ revenues spurted 43.58 per cent and net profits jumped 51.81 per cent. Its revenues could well leapfrog the $2 billion mark this fiscal. ‘‘TCS has an excellent client-base, including GE, though it contributed a lower percentage share of its revenues this time, that was because TCS has added around 50 new clients,’’ explained the analyst.