Infosys Q1 results in focus

The crucial corporate earnings season has just begun. Investors will closely watch the post-Q1 June 2011 result management commentary to gauge the future earnings outlook at a time when firms are witnessing cost pressures amid rising interest rates and staff costs. A hike in transportation costs will add to cost pressure of India Inc. As per reports, freight rates have gone up by 8% to 9% on all routes across India following the recent hike in diesel prices.



Analysts expect IT bellwether Infosys to revise upwards its revenue and earnings growth forecast for the year ending March 2012 (FY 2012) in rupee terms at the time of announcement of Q1 June 2011 results on Tuesday, 12 July 2011, with the company seen beating its own guidance for Q1 June 2011 and due to higher pricing.

Salary hike and increase in tax rates due to the expiry of Software Technology Parks of India (STPI) tax benefits is seen pulling Infosys' net profit lower in Q1 June 2011 even as a good revenue growth is expected from the IT bellwether on the back of volume growth and uptick in pricing. A total of 8 brokerages expect a between 1.1% to 7.1% fall in Infosys' consolidated net profit as per International Financial Reporting Standards (IFRS) at between Rs 1689 crore to Rs 1797.20 crore in Q1 June 2011 over Q4 March 2011. Revenue is seen rising 2.6% to 4.67% at between Rs 7435 crore to Rs 7589.20 crore in Q1 June 2011 over Q4 March 2011.

Two days after Infosys reports, IT giant TCS unveils Q1 results on Thursday, 14 July 2011. Crude oil refiner Essar Oil unveils Q1 results on Monday, 11 July 2011.

Sugar stocks may extend recent gains on market buzz that the government is considering sugar decontrol. Shares of organized retailers could also extend their recent winning streak on buzz the government is dwelling on a proposal to allow foreign direct investment in multi-brand retail. Fertilizer stocks will be in focus on buzz the government is considering changes in the urea policy. Urea is the only fertiliser that remains under full price control after the government partially freed the prices of phosphatic and potash fertilisers at the beginning of the previous fiscal.

Shares of automobile and realty firms may edge lower as commercial banks are raising lending rates. Higher borrowing costs will make purchases of cars and two-wheelers and residential housing costlier for the buyer through financing option.

Investors will watch the progress of the monsoon rains in the crucial sowing month of July. Monsoon rains were 25% below normal in the week to 6 July 2011, slowing from the 10% above average rains in the previous week, the weather office said on Thursday, 7 July 2011. Rainfall in the month of July is considered crucial as sowing of a number of crops starts in June and good July rains determine the soil moisture and ensure proper development of the crops planted in June.