Software & Services share price target

Building Materials: Q4FY24 Preview Performance to remain lacklustre. IT Services: Q4FY24 Preview A couple of quarters of pain seem unavoidable

Pressure on margins for IT companies to continue in the medium term, in our view, given dominance of cost take-out projects

Accenture Q2 FY24 Result Update

In Q3FY24, the industry saw its revenue growth slow down given business seasonality, higher than expected furloughs, lesser number of billing hours, weak discretionary spending and tough macro environment.
Among Tier-1 players revenue growth ranged between +6.5% YoY (HCLTech) and -4.6% YoY (Tech Mahindra).

The Q3FY24 earnings from the big four IT firms — Tata Consultancy Services (TCS), Infosys, HCL Technologies (HCL Tech) and Wipro — mirror a global slowdown in IT spending. This trend comes as a surprise to no one, since Indian IT companies have been flagging that risk over the last couple of quarters.

We anticipate that Tier I firms under our coverage will report ~1.5% to 7.3% (on a QoQ basis) and -6.4% to 7.1% (on a YoY basis) revenue growth for Q3FY24E. In contrast, revenue growth for Tier II players is anticipated to vary from 3.3% to 47.9% on a quarterly basis and from 14.8% to 25.1% on an annual basis for Q3FY24E.

Our picks from large caps: HCL Tech, LTIMindtree Our picks from Mid Caps: Coforge, Persistent Systems, and Cyient.

Top Sector Ideas - IT Services