Cognizant to Overtake Wipro as Third Largest IT Company

IT firm Cognizant is all set to overtake Wipro to become the country’s third largest IT services provider after TCS and Infosys, when it announces its results on August 2.

Wipro reported IT services revenues at $1.408 billion for the April-June quarter. This is about $40 million less than Cognizant’s April-June quarter revenue guidance of $1.45 billion.

The underlying business fundamentals for the IT sector are healthy as the recently announced strong quarterly earnings of TCS, IBM and Accenture suggest. Therefore, Cognizant is expected to meet if not beat its guidance. The weakness that Infosys’ and Wipro’s results exhibit is more a reflection of company-specific issues as against market fundamentals.

[advt]JP Morgan analyst Tientsin Huang, in a report on Cognizant, drew a revenue estimate of $1.46 billion for the company in the April-June quarter. Huang expects an upside in revenues because of Cognizant’s track record of reporting premium growth in the June quarter and its more favorable regional mix (larger proportion of North America). Cognizant’s $1.45 billion April-June guidance is also greater than the lower end of Wipro’s July-September revenue guidance of between $1.436-1 .464 billion.

Ankur Rudra, IT analyst at Ambit Capital, said,

“Historically Cognizant has given a conservative guidance and has a good record of beating it. There is a good momentum to their business with some good client wins. They are likely to surpass Wipro’s revenues in the April-June quarter”

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