Top IT companies may log muted Q2 growth on macro uncertainty

economictimes.indiatimes.com:

Tata Consultancy Services, Infosys and HCLTech in the last few weeks.

The three-month period through September is usually seen as a strong quarter for the sector. TCS will kick off the quarterly earnings season for India Inc on October 11. Infosys and HCLTech will report results on October 12.

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Kotak Institutional Equities expects revenue at tier-1 IT companies to range between a decline of 0.6% and growth of 0.8% compared with the previous quarter.

“Continued rationalisation of discretionary programmes, combined with extended timelines of execution of existing ones, is leading to a leakage of revenues and weak trends,” the brokerage said.

However, Jefferies expects aggregate revenue to expand 0.5% quarter-on-quarter, marking a return to growth after two quarters of revenue decline. “We note that the growth is still soft, given the challenging demand environment, but expect some stabilisation and deal ramp ups to drive a slight growth uptick,” the global brokerage said.


For large IT firms, the brokerage expects revenue to be up to 1% higher or lower compared with the previous quarter. “We expect Infosys (1%) to lead on growth, while Tech Mahindra and Wipro (-1% each) are likely to lag.”

Weakness will be broad-based and amplified in the banking, retail and telecom segments, Kotak said, predicting revenue to be between 2.9% lower and 3.2% higher from a year earlier.