TCS, Infosys, HCL Tech Q2 results show billion dollar deals aren't enough

India Business News: The Q2 earnings for major IT services companies Tata Consultancy Services (TCS), Infosys, and HCL Tech have shown positive results in terms of margins

The common thread of robust deal wins provides hopes that FY25 could be a relatively better year as deals get converted to faster revenue growth.

Though the top tier firms have been announcing large deal wins over the past few weeks, brokerages believe they are unlikely to translate into a major change in revenue growth forecast of the Indian IT firms.

HCL Tech Q2 Preview: HCL Techs Q2 consolidated revenue is seen rising a mere 2% sequentially to Rs 26,804.4 crore according to the average of estimates given by nine brokerage firms. But on a year-on-year (YoY) basis, it is seen increasing by 9%. Consolidated net profit may rise 5% sequentially and over 6% YoY to Rs 3,707 crore, the estimates showed.

Hindustan Unilever is set to reveal Q4 2018 revenue growth led by price hikes with volume growth driven by mid single-digits in the skin cleansing sector. Despite an anticipated dip in margins due to a hike in ad-spend and a 30 bps royalty impact, Jefferies suggests the YoY margin decline will be around 60 bps versus 100-200 bps seen in the nine months ending December 2017. Gross margins are expected to rise quarter-on-quarter while the company could see continued strength in home care revenue growth due to increases in laundering prices.

Among the Big Five, Tata Consultancy Services (TCS) and HCLTech have enriched the loyalists, literally. The other three - Infosys, Wipro and Tech Mahindra (TechM) – havent yielded anything for those sticking with them since April 2022.

On April 20, apart from announcing Q4 earnings and the full-year FY23 financial report, HCL Tech board members will also declare first interim dividend for FY24.

TCS and Infosys will release their Q3 earnings today amid expectations of weak numbers. However, bulls believe that this could be the last dull quarter before revenue growth picks up in Q4. Analysts anticipate TCS to deliver 1.5% QoQ cc revenue growth driven by large deal ramp-ups, with margin expansion driven by operational efficiencies. On the other hand, Infosys is expected to see a decline in USD revenue due to seasonal furloughs and the impact of a slowdown in discretionary tech spending.

TCS reports strong Q1 earnings, surpassing estimates slightly, while HCL Tech struggles and misses expectations. TCS shows resilience and strong performance, with a solid order book, while HCL Tech faces challenges in the IT sector.

Stocks to buy today: HCL Tech has delivered better results in comparison to Infosys and TCS, say market experts