Earnings preview: Indian IT firms to report soft numbers in Q2FY24; revenue, profit likely to be muted

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JM Financial. The brokerage firm expects Infosys and TCS to be at the upper end while Tech Mahindra, still impacted by project ramp-downs towards the first quarter-end, to be at the bottom end of the band. Mid-caps under coverage will fare relatively better.

Large deal wins, though positive, are unlikely to contribute meaningfully to FY24 revenues, JM Financial said. JM Financial expects guidance cut by both HCL Tech (4-6 per cent from 6-8 per cent) and Coforge (12-14 per cent from 13-16 per cent). "Barring players who gave wage hikes in Q2 (LTIMindtree, Persistent Systems), sharper cost focus will drive modest margin expansion for most.

We expect commentary to remain circumspect quelling any hope of a recovery in the second half. A plateau, instead of a rebound, is more likely. Near-term stock performance should mirror that (side-ways movement)," said JM Financial.

Also Read: Q2 earnings expected to make limited waves for IT (Exciting news! Mint is now on WhatsApp Channels. Subscribe today by clicking the link and stay updated with the latest financial insights! Click here!) Also Read: Stock picks: Hindustan Aeronautics, NTPC - two PSU stocks that can give up to 22% upside; check details Brokerage firm Motilal Oswal Financial Services expects growth of the IT services industry to remain weak in Q2FY24, as macroeconomic uncertainty continues to weigh on discretionary spending. "While the industry has witnessed an uptick in order inflow over the past two months with a focus on cost efficiency, the slowdown in project-based business is expected to hamper overall industry growth, even though Q2 is traditionally a robust season for the sector," Motilal Oswal said.