
Stock analysts are largely expecting June to be a muted quarter for IT majors, owing to weak discretionary spending, slower decision making, and cautious approach by clients. This comes amid the macro and geopolitical uncertainty and AI-led tech disruption. With the sector beset by a volatile macro environment, deal total contract value (TCV) shall be a crucial metric to be watched closely, they said.
Except for Infosys and LTIMindtree, all tier-1 players are expected to report muted constant currency (CC) sequential revenue growth in Q1, Emkay Global said. Tier-2 companies are expected to see a divergence in growth performance, with Coforge, Persistent Systems, and eClerx Services Ltd likely to report strong sequential revenue growth, the domestic brokerage said adding that Birlasoft, Cyient, and L&T Technology Services (LTTS) may register muted growth.
MOFSL expects TCS and HCL Tech to report QoQ CC revenue decline of 0.5 per cent and 1.2 per cent, respectively, in Q1. Infosys is anticipated to clock 1.5 per cent growth, driven by recent deal ramp-ups and 20 bps inorganic contribution from its recent acquisition.
"Meanwhile, Tech Mahindra/Wipro are likely to post QoQ CC revenue decline of 1 per cent/2.5 per cent. LTIM could deliver 1.5 per cent QoQ CC growth, driven by deal ramp-ups and seasonally strong 1Q," MOFSL said.
Among mid-tier firms, this brokerage expects Coforge to lead the pack with 7 per cent CC QoQ revenue growth, driven by strong organic momentum and steady ramp-up of the Sabre deal, along with contributions from recent acquisitions. Persistent Systems Ltd and Hexaware Technologies Ltd are are also likely to deliver 4 per cent and 2.2 per cent CC QoQ growth, while Mphasis could post 1.5 per cent QoQ growth, MOFSL said.
It expects Cyient DET to report yet another weak quarter, with QoQ CC revenue decline of 2 per cent.
"We estimate (2)-1.75 per cent CC QoQ revenue growth for top-6. The dollar revenue print could be higher by 80-230bps as cross-currency turned favourable. We expect 1.5-7.4 per cent CC QoQ growth for the next-4 (Mphasis, Coforge, Persistent, Hexaware). Coforge, led by Sabre deal, should lead this pack. Margin improvements, if at all, will likely be limited as weak demand and strong rupee weighs on players’ margin improvement programs," JM said.
This brokerage believes Infosys might raise lower end of its guidance. Wipro could guide for a minus 1 per cent to 1 per cent CC growth for the September quarter, JM said.