Macroeconomic volatility impacted discretionary spending and several key verticals (retail, manufacturing, automotive) significantly. The correlation between incremental revenue and TCV is also lacking alignment. Hence, the hopes of FY26 gathering growth momentum and revenue growth faring better than FY25 are being pushed to FY27.
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ICICI Securities Report
IT sector reported muted Q4 FY25 revenue growth with most of the coverage stocks (especially the engineering research and development pack), reporting a miss. Total contract value and margin execution fared better than expectations for Q4 FY25/FY25. Headcount addition picked up marginally QoQ but recovered significantly for full year.
A few companies dropping guidance and delaying wage hikes were few negatives. A few silver linings included:
Tier-II outperforming the pack with continued momentum – namely Persistent Systems, Mphasis and Coforge.
Decent FY25 revenue growth recovery vs FY24.
AI-led traction in revenue growth and deal wins.
However, macroeconomic volatility impacted discretionary spending and several key verticals (retail, manufacturing, automotive) significantly. The correlation between incremental revenue and TCV is also lacking alignment. Hence, the hopes of FY26 gathering growth momentum and revenue growth faring better than FY25 are being pushed to FY27.
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