Key Points
Jefferies has taken a 'Hold' view on Tata Consultancy Services (TCS), HCL Technologies and LTI MIndTree while an 'Underperform' stance on Wipro and Tech Mahindra..
Jefferies' estimates on the IT sector hinge upon the takeaways from its conversations with managements of seven domestic IT firms who have acknowledged that the demand uncertainty will linger, going forward...
While the management commentary inspires confidence on margin stability, there are no clear signs of improvement in demand, the brokerage said.. "Increasing revenue leakage and deeper furloughs in 3Q, suggest near term growth outlook remains weak..
Moreover, CY24 budgets could be set lower, posing risks to consensus estimates of 7.7% growth in FY25," the Jefferies note said.. Key takeaways:. 1) A pick-up in demand environment remains elusive as the transition from growth mindset to survival mindset among clients is leading to rising scrutiny of discretionary IT spends and most new deals are being led by cost-takeout initiatives...
This would lower the benchmark for CY24 budgets which in turn could pose risks to consensus estimates of 7.7% growth in FY25.. 5) Focus will now shift to expanding gross margins, with supply side challenges no longer a headwind...
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