Infosys is expected to report the strongest sequential revenue growth among the top IT companies for the quarter ended September on the back of ramp up in some large and mega projects, while Wipro is likely to see stable to flat growth, according to the earnings preview by various brokerages.
Infosys’ revenue is expected to grow by 4% quarter-on-quarter to Rs 40,919.5 crore, according to an average estimate of six brokerage houses. Meanwhile, Wipro is seen to report a 1% sequential increase in its topline to Rs 22,174.2 crore.
Phillip Capital estimates Infosys’ revenue growth at 2.6% quarter-on-quarter, driven by the continued ramp-up of large deals, integration of newly acquired Intech contributing around 1%, and recovery in the banking, financial services, and insurance (BFSI) vertical.
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Meanwhile, Nuvama Institutional Equities expects a slightly higher growth of 3.2% QoQ, with a similar contribution from the Intech acquisition. Nomura also projects growth at 3.3% QoQ, attributing it to the demand improvement in financial services and large deal ramp-ups.
Wipro’s growth forecast is subdued compared to Infosys. Phillip Capital and Nuvama Institutional Equities expects its services revenue growth to be flat, falling within the company’s guided range of -1% to +1%.
Nomura has also forecast flat growth, while Kotak Institutional Equities has predicted a slight 0.1% increase, citing strengths in the financial services vertical but weakness in energy, utilities, and manufacturing as offsetting factors.
Margins
Infosys’ earnings before interest and tax (Ebit) or operating margins are expected to see a slight improvement. Phillip Capital anticipates a 30 basis points (bps) improvement, supported by strong growth and operational efficiencies from Project Maximus.
Nomura expects a smaller margin expansion of 10 bps, citing the absence of salary hikes in Q2 as a contributing factor. Kotak Institutional Equities foresees a 20 bps increase QoQ driven by higher utilisation rates and productivity improvements
For Wipro, the margin outlook is mixed. Nuvama anticipates a 25 bps decline, reflecting the impact of a wage hike. Nomura projects a 40 bps expansion, supported by cost control measures and higher utilisation at Capco.
Kotak Institutional Equities has forecast stable margins despite wage revisions and a potential decline in employee utilisation rates, noting tailwinds from rupee depreciation and overall cost control.
Deal Wins and Sector Performance
For Infosys, Kotak Institutional Equities projects a large deal total contract value (TCV) of $3 billion, indicating a decline both QoQ and YoY, attributed to a high base in the previous periods. Jefferies expects Infosys’ large deal TCV to range between $2.5-3 billion, focusing on the discretionary spend environment.
Wipro’s large deal TCV is expected to be around $1.2 billion, with Kotak Institutional Equities noting a higher mix of renewals compared to the previous quarter. The company’s consulting business, Capco, is highlighted by several brokerages, with Nomura and Kotak both expressing interest in updates on this segment and its outlook.
Infosys is expected to show strength in the BFSI vertical, a sentiment echoed by Phillip Capital and Nomura. Kotak notes that growth will likely be led by financial services, with an emphasis on the banking vertical.
In contrast, Wipro is expected to see growth led by its BFSI and healthcare verticals, though energy and utilities are likely to present challenges.
Guidance and What to Watch For
For Infosys, multiple brokerages expect an upgrade in its fiscal 2025 revenue growth guidance. Phillip Capital and Kotak Institutional Equities forecast an increase to 4-5%, up from the previous 3-4%.
Nuvama also expects a similar upgrade, while Jefferies anticipates the guidance to remain unchanged, focusing instead on the discretionary spending environment.
Wipro’s guidance, on the other hand, is expected to remain conservative. Nuvama forecasts a flat to -1% CC QoQ guidance for Q3 FY25. Nomura expects Wipro to guide for a -2% to 0% revenue growth in Q3, while Kotak predicts a range of -0.5% to +1.5%.
From: financialexpress
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