Despite the marginal impact from forex fluctuations, the downbeat forecast for the September quarter would barely lift the spirits of Indian IT which, traditionally, is a strong wicket to bat on. The dominant theme in the Indian IT sector hinges on cost-takeout projects to fund enterprises’ transformation programmes.
“In Q2 FY24 (September quarter), the IT sector is expected to deliver a soft quarter, although Q2 has historically been a seasonally strong quarter. Growth divergence is expected between companies, with tier-1 IT sequential growth ranging from -1.4% to 2.2% and mid-tier IT sequential growth ranging from 0.9% to 3.8%,” HDFC Securities said in its IT earnings preview.
Brokerage firm Motilal Oswal said revenues of tier-1 companies are expected to remain muted on account of weak macro, cuts in discretionary spends, and project deferrals. “Tech Mahindra and Wipro should see another quarter of sequential constant currency decline in revenues to the tune of 1.1% and 1.2%, respectively. HCLTech should see a recovery (3.6% sequentially in constant currency) after two consecutive quarters of decline, while Infosys, LTIMindtree and TCS should grow 0.8%, 1.4% and 1.1% sequentially on a CC basis. Overall, tier-I companies are expected to exhibit weak median revenues (1% sequentially in constant currency),” it reported.
Brokerage firm BNP Paribas said that while most IT services firms saw a further moderation in revenue growth in the June quarter, deal wins accelerated. “Since then, the large/mega deal win momentum has quickened, giving us confidence in strong growth for FY25. After a hiatus, there’s now a rise in multi-billion dollar deals in IT services. The top four Indian IT firms -TCS, Infosys, Wipro and HCLTech – collectively booked deals worth nearly $20 billion in the June quarter, with TCS accounting for about half of that. A good part of that has come from large deals,” it said.
Infosys recently expanded its partnership with global telecom major Liberty Global in a deal valued at 1.5 billion euros over the initial five-year term, and at 2.3 billion euros if the contract is extended to eight years.
