Q4 earnings: Between TCS and Infosys, who will win the IT battle? Here’s what analysts expect | India Business News – Times of India

by The Technical Blogs

TCS, Infosys Q4 earnings: TCS (Tata Consultancy Services) and Infosys, two of India’s top software exporters, will begin the fourth quarter earnings season this month. It’s expected to be a modest quarter for IT firms.
As per an ET report, TCS will release its fourth quarter results on April 12, while Infosys will announce theirs on April 18.
Overall, IT companies are expected to have a subdued performance in the March quarter, with no significant surprises expected.Nuvama predicts industry revenue growth to range between -1.5% and +4.5%, influenced by the gradual return of furloughs and reduced discretionary technology spending.
However, the focus is primarily on the guidance for the current fiscal year (FY25), as the weak conclusion to FY24 and an uncertain demand environment may moderate initial forecasts for FY25 among most players.
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TCS and Infosys’ Q4 earnings expectations

Analysts expect that TCS will demonstrate industry-leading growth in the March quarter, supported by the BSNL deal. Additionally, the company’s constant currency revenue growth is expected to outperform its peers sequentially during the March quarter.
Meanwhile, Infosys could begin to witness a recovery in earnings from the first quarter of FY25, driven by expectations of significant ramp-ups in large deals.
During the fourth quarter, Kotak Equities has projected a 1.7% quarter-on-quarter constant revenue growth for TCS, whereas Infosys might experience a decline of 1.5% on a sequential basis.
The March quarter tends to be seasonally weak for Infosys. The sequential decline is expected due to reduced revenues from third-party software sales and weak discretionary spending.
Regarding margins, TCS is expected to outperform its Bengaluru-based peer, with a sequential improvement likely aided by enhanced employee utilization and pyramid management.
Kotak forecasts a 40 basis points decline in Infosys’ EBIT margins due to the impact of wage revisions and a lack of leverage from growth.
Deal wins for the fourth quarter are expected to be around $10 billion for TCS and approximately $3 billion for Infosys. In the December quarter, Infosys secured large deals worth $3.2 billion, while TCS boasted deals valued at $8.1 billion.
Indian IT companies, including Infosys, which issue annual revenue growth guidelines, are likely to adopt a cautious approach in their guidance. This caution is due to ongoing macroeconomic uncertainty and the recent forecast cut by Accenture.
Nomura anticipates that Infosys will guide for a 2-5% year-on-year revenue growth in constant currency terms, with an EBIT margin band of 20-22% for FY25.
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Stock outlook

The IT sector has experienced significant volatility in recent months, marked by a strong rally in December and January followed by a sharp correction in March.
CLSA India has recently upgraded its rating on a few frontline tech stocks and raised price targets for some of them. However, it expects most companies to offer a conservative outlook due to the uncertain global environment.
TCS has been upgraded from “sell” to “underperform,” with the price target raised to Rs 4,043 from Rs 3,925. Meanwhile, the brokerage has retained its “outperform” rating on Infosys but lowered the price target to Rs 1,706 from Rs 1,741.

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