IT shares extend fall on outlook worries
Reuters Market Eye - Indian technology shares fall for a second day, with Cognizant's SEC filing clouding revenue outlook for the sector.
Cognizant Technology Solutions Corp (CTSH.O), in a filing to the SEC on Tuesday, said its top executives will receive 100 percent of their performance-linked shares if the company achieves revenue of $8.5 billion next year, a 16 percent rise over its projected 2012 revenue.
The filing implies that CY13 growth would be lower than the company's outlook for CY12.
"Based on historical trends, Cognizant's annual guidance corresponds with revenue growth corresponding to 100 percent of performance units," IDFC said in a note.
Barclays Capital, however, feels that while Cognizant may see a slowdown, it does not pose an incremental risk to Barclays' FY14 growth forecasts of 15 percent for TCS and 13 percent for HCL Tech.
"Cognizant's growth premium to Indian IT vendors has diminished in the past two years due to its larger revenue and growth base," Barclays Capital said in a note.
An additional negative may come from the rupee. Credit Agricole believes the government winning the vote on foreign direct investment in multi-brand retail will continue to help rupee. It expects the rupee could rise to 52 per dollar by end 2013.
Infosys Ltd (INFY.NS) down 2.4 percent, Tata Consultancy Services (TCS.NS) is down 2 percent, while HCL Technology is down 2.1 percent.
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The BSE Sensex ended up slightly on Monday after rising to a record high for a third consecutive session as strong foreign buying continued to boost domestic-focused shares such as those of HDFC Bank, but momentum waned as exporters slumped on a stronger currency. Full Article