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Deven Choksey Research Report
For Q1 FY25, the performance of IT companies within our coverage in revenue growth was broadly consistent with our estimates.
IT companies witnessed green shots in the BFSI segment, however, clients remain cautious about tech spending highlighting no to little pickup in discretionary spending.
Tier-1 companies witnessed revenue growth from North America and Europe. Management commentaries suggest that FY25E is likely to outperform FY24, with stronger growth anticipated in H2 FY25E compared to H1 FY25E.
Anticipation of better H2 FY25E performance is driven by growth across verticals and regions, deal ramp-ups, and a relatively lower base of FY24.
Employee attrition has bottomed out; all the IT companies are focusing on improving utilization and upskilling the current employee base.
The medium to long-term prospects are favorable, driven by higher deal wins, potential interest rate cuts that could boost latent demand, and growing momentum for Gen-AI, especially in areas such as automation, cloud migration, data modernization, and technology integration.
Top Picks:
We remain positive on Infibeam Avenues, Tech Mahindra, and Sonata Software considering the deal wins, healthy quarterly results, improved management commentary, and anticipation of stronger FY25E results against FY24.
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