IT Services Q1 Results Preview - Infosys Likely To Lead Revenue Growth: Systematix

Systematix Research Report

Q1 FY25 could be a mixed bag for IT companies, especially on margins. Deal execution may pick up in 1Q post major and minor furloughs in Q3 and Q4. We expect Tata Consultancy Services Ltd. to post sequential revenue growth in Q1, boosted by strong deal wins and BSNL order execution.

However, revenue growth may be lower compared to historical Q1 numbers, as we expect weakness in the U.S. and continental European markets to continue in Q1, akin to Q4.

We expect Infosys Ltd. to post strong revenue growth on deal wins; it may lead the Q1 revenue growth amongst the top five companies (TCS, Infosys, Wipro, HCLTech, and Tech Mahindra).

HCLTech had already indicated subdued revenue growth for Q1 FY25 in the last quarter, citing the impact of early offshoring of a large contract, apart from the pass back of usual productivity gains to customers.

Wipro and Tech Mahindra too may post muted sequential USD revenue growth. On the margin front, TCS may bear the brunt of wage hikes, while HCLTech could be impacted by lower revenue growth during the quarter.

Infosys, Wipro and Tech Mahindra may see their margins improve, sequentially, on superior utilisation and cost optimisation initiatives.

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