The upcoming weeks will see Indian IT giants Tata Consultancy Services (TCS) and Infosys reveal their financial performance for the fourth quarter of FY24. TCS is scheduled to release its numbers on April 12, with Infosys following suit on April 18. Despite not expecting any breakthrough, IT companies may show weak performance in the final quarter of March.
Nuvama’s forecast suggests the industry’s revenue growth could range from -1.5% to +4.5%. The reason for this expected slowdown is that more employees are returning to work, leading companies to spend less on optional technology.
However, the most crucial aspect lies in what these companies predict for the upcoming fiscal year, FY25. Due to the challenging end to FY24 and the current lower demand, their forecasts for FY25 might not initially be very optimistic.
Prediction for TCS and Infosys in the Fourth Quarter
TCS is likely to keep growing at 1.7%, as they have in the past. For Infosys, they might see a 1.5% decrease based on the previous quarter’s results, according to Kotak Securities.
Infosys tends to have lower sales in March, which is why they might see a decrease. TCS, on the other hand, has the BSNL deal to boost its revenue.
On the profit side, TCS might do better than Infosys, mainly due to how they manage their staff and projects.
Kotak expects Infosys to see a 40 basis point decrease in EBIT margins due to wage increases and not benefiting much from growth.
Deal Projection
In terms of new deals, TCS is expected to secure about $10 billion, while Infosys might get around $3 billion. In the previous quarter, Infosys got $3.2 billion in new deals, and TCS got $8.1 billion.
Indian IT companies, including Infosys, are likely to give careful guidance on their future revenue growth because of the uncertain economy and recent forecast changes from Accenture.
Nomura thinks Infosys might guide for 2-5% year-on-year revenue growth with profit margins around 20-22% for FY25.
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Disclaimer: The above content has been curated from various media reports. It is intended for informational purposes only. Please consult a SEBI-registered investment advisor before investing.
