Q4 results preview: IT sector likely to report muted revenue growth with stable margins; all eyes on FY25 guidance

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Infosys will release its Q4 results on April 18, while HCL Technologies will announce its March quarter earnings on April 26. The largecap IT services players are expected to report modest revenue growth in Q4FY24 as muted demand trends continue on account of weak discretionary spending and cautious behavior by clients, amid an uncertain global macroeconomic situation. Among verticals, BFSI, Communications, and Hi-Tech are expected to be among the laggards, with continued weakness in North America.

Also Read: Q4 results: TCS, Infosys, HCL Technologies to kick start Q4 earnings season; Check dates here However, analysts believe margins to remain steady despite weak revenue growth, as companies optimize costs and tighten discretionary spending. The impact of weak earnings estimates for the IT sector can also be seen in the performance of IT stocks. The Nifty IT index has corrected more than 6% over the last one month, underperforming the benchmark Nifty 50 index, as the market starts factoring in this slower recovery.

According to estimates by Kotak Institutional Equities, Infosys Q4 results are likely to be weak, with a 1.5% sequential revenue decline. Wipro, LTI Mindtree and Tech Mahindra are also expected to report a sequential revenue decline, while HCL Technologies (services) should outperform on growth at 2.9% in constant currency terms. “TCS and HCL Technologies will outperform on growth at 0.2-1.7% c/c QoQ.