Uncertainty about spending by US and European clients in a weak global economy will likely weigh on the earnings of India's software giants Tata consultancy Services (TCS) and Infosys, analysts said on Wednesday. The domestic IT industry earns about three-quarters of its revenues from customers in the US and Europe.
Infosys is likely to pare its revenue growth estimate for the current fiscal year to as low as 5% when it posts quarterly earnings on Thursday, analysts said.
The company had in April forecast 8-10% growth for 2012-13, disappointing investors enough to cut 13% of its market value on the day. It has gained about 2% since.
Likewise, analysts expect TCS to report a sequential growth of 2.6% for the quarter.
"Hopes of a recovery are just that, hopes," said Apurva Shah, head of research at BNP Paribas Mutual Fund, which manages investments in top IT companies.
A weaker first half may have been factored in by the street, but "hopes for recovery are fading fast," said Bhavin Shah, chief executive of Equirus Securities.