Large-cap IT companies like Infosys Ltd., Tata Consultancy Services Ltd. and HCL Technologies Ltd. are expected to achieve 7-9% growth in the next financial year, Rahul Jain, director of research at Dolat Capital told NDTV Profit.
Jain said that the projections are based on current economic data and disruptions could dampen growth prospects.
“I believe the guidance we receive from companies like Infosys and HCL will be crucial. If their numbers fall within the range of 5% to 6%, it could lead to further de-rating or at least a reduction in estimates,” Jain said.
For the future outlook for the sector, all eyes are currently on the April earnings season. Till then, there could be some short-term pain, the top executive added.
“We don't expect a significant correction. However, some bit of pain may come in the mindset due to potential estimate cuts in Q4,” Jain said.
Jain expects some upside potential once the market resets in April-May.
“We don't see them crashing significantly in terms of growth or thought process, neither from a valuation perspective; they were always pretty reasonable, so this 15%-odd correction has brought them to the zone where they can trend,” he explained.
Further, he noted that that final outlook for the top IT firms won't be clear until April. Jain sees a potential upside if the top firms project growth of around 6-7%, which will result in their current estimates remaining unchanged.
Jain added that a 5% growth is the bare minimum for the sector, with an optimistic scenario of “10-12% growth” for the top three IT firms.
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