IT Q3 Preview - Setting The Stage For A CY25 Revival; LTIMindtree, Coforge Remains Motilal Oswal's Top Picks

Motilal Oswal Report

After a decent Q2, we expect seasonal furloughs to weigh on growth for the sector in Q3 FY25. That said, looking beyond seasonality, macro uncertainty is gradually easing and we expect the outlook for technology spending to improve in CY25. While the initial phase of recovery in H1 FY25 was sluggish, we now see clear signs of an acceleration.

Recovery appears to be expanding beyond U.S. BFSI—which continues to strengthen—into additional industry verticals such as Hi-Tech, which is recovering ahead of schedule.

We expect tier-2 companies to continue to outpace tier-1 firms in growth during the quarter. The most important catalyst for the sector now would come after Q3 FY25, when client budgets for CY25 would be finalized and the magnitude of change in client behavior would become clearer.

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