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IT Q2FY25 Preview: Gradual recovery likely; Outlook commentary key ahead

ICICIdirect Research 11 Oct 2024 DISCLAIMER

Among Tier I companies only Infosys will lead, reporting a revenue growth 1.8% QoQ followed by 1.6% QoQ growth for HCL Tech while within Tier II companies Persistent (4% QoQ growth) is expected to continue is growth momentum. Tier II, in general will report better topline growth with LTIMindtreee and Coforge, likely to report 2-3% QoQ growth.

Margins are of most companies are expected to improve QoQ (by 50-70 bps) given the currency tailwinds, impact of visa costs in Q1 base and costs optimisation. Wipro and Persistent, however, would witness a QoQ decline of 100-130 bps, given the wage hike impact

Key factor to watch out will be management commentary on demand. We also note that even Q3 might be muted for IT players, given seasonality. TCS, has maintained that demand remain muted for discretionary, albeit BFSI has seen some greenshoots. IT index has returned ~19% in last 6 months and 12-13% in last 3 months, in anticipation of likely recovery. Thus, market will seek growth recovery outlook to maintain the positive stock price momentum from here on.

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