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IT Q2FY25 Preview: Gradual recovery likely; Outlook commentary key ahead
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.
Disclaimer – I ICICI Securities Ltd. ( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400 025, India, Tel No : 022 - 6807 7100. I-Sec is acting as a distributor to solicit bond related products. All disputes with respect to the distribution activity, would not have access to Exchange investor redressal forum or Arbitration mechanism. The contents herein above shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. Investments in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein mentioned are solely for informational and educational purpose.
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