IT Q4 Results Preview - Weak FY24 Exit, A Weak FY25 Start Could Pressure Consensus Estimates: Nirmal Bang

NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Nirmal Bang Report.After a 410 basis points outperformance by Nifty IT against Nifty in 2023, it has underperformed by 260 basis points quarter-to-date. Elevated price-to-earning multiples of tier-I and tier-II players is either a sign that there is an earnings upgrade cycle in the offing for FY25/FY26 and/or that flows into equities are expected to remain strong going forward. We think that the earnings do not have a material upside (Continued uncertainty to keep a lid on spending). .We believe that Q4 FY24 will be a better quarter QoQ largely because of a higher number of working days. The post quarter commentary on demand conditions for 2024/FY25 will be the highlight. Consensus (including us) is building in a modestly better FY25 versus FY24 on the back of strong order inflow in FY24 and expectation of a spending pick-up in H2 CY24. Guidance by some global IT companies paints a different picture as a few of them (Capgemini, Cognizant, Tietoevery and Globant) are guiding towards modestly weaker growth in 2024 versus 2023 even after assuming a pick-up in H2 CY24. Recently Accenture lowered its FY24 (year-ender August) guidance but pointed to likely stronger exit, primarily driven by higher contribution of acquisitions and large deal wins (Update)..We expect 4-7% constant currency revenue growth guidance by both Infosys Ltd. as well as HCLTech Ltd. for FY25 with modestly positive demand commentary versus FY24, especially on discretionary spending. The H2 2024 rebound hope is at risk due to:U.S. interest rates remaining higher for longer,Expectations of dramatic changes in policies post U.S. elections in Nov. 2024 if Donald Trump wins. The announcement on large deal wins by Indian IT players have been relatively muted since September 2023..We persist with our ‘Underweight’ stance on the IT sector as we believe that we are in a ‘slower for longer’ demand environment and the risk is for current consensus estimates to be cut rather than raised..Click on the attachment to read the full report:.Shree Cement - Expanding Footprint Largely In Existing Markets: Motilal Oswal.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

IT Q4 Results Preview - Weak FY24 Exit, A Weak FY25 Start Could Pressure Consensus Estimates: Nirmal Bang

We persist with our ‘Underweight’ stance on the IT sector

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