Infotech Enterprises (BUY) - Quarterly estimates - ICICISecurities

- Expect consolidated USD revenue to decline 0.5% QoQ to USD85.5mn as the gaps created by the ramp downs at four clients over the past two quarters are not yet filled, even though there are no further ramp downs or client specific issues as such.

- Expect EBITDA margin to decline 250bps QoQ to 14.5% due to the impact of wage hikes (300-350bps), SG&A/investments (50-100bps) with the key offset being currency (Re/$ depreciation).

- Infotech is expected to make forex gains to the tune of ~Rs100mn as against a forex loss of Rs15mn in Q4FY13.

- PAT to decline 4.6% QoQ as the impact of lower EBITDA will be partially offset by higher forex gains QoQ.

- There might be an extraordinary tax expense at Infotech due to repatriation of Rs400mn from foreign subsidiaries to India. The tax amount will eventually get adjusted in the dividend distribution tax that the company would pay on dividend disbursal.

- Key factors to watch: i) Outlook for the UT&C segment and EMI, ii) revenue growth from top clients, iii) fresher hiring and iv) margin outlook and capex plan.

Source : Equity Bulls

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