BENGALURU: IT companies are set to announce their Q4 results in the coming weeks and analysts predict Q4FY23 revenue growth will be muted due to macroeconomic challenges apart from the usual March quarter seasonality.
Kotak Securities said they expect Infosys to guide for 5-7% in constant currency. “EBIT margins will likely improve gradually, as the balance is in favour of tailwinds. Infosys and TCS, followed by HCL, are better positioned among Tier 1. We bake in a likely cut in BFS tech spending in the near term, the slowdown in discretionary spending and greater risks to growth through a 1-2% cut in FY2024-25E revenue growth and fine-tuning of target multiple, leading to a 2-6% cut in fair values,” it said.
Also, it expects a subdued demand outlook on near-term tech spending. The banking crisis in US regional banks and European banks can induce greater caution and impact overall tech spends by banking clients. “The demand outlook of segments such as mortgages, hi-tech, and certain segments of retail and telecom is weak. We expect macro uncertainties to limit near-term demand visibility,” it added.
Motilal Oswal said BFSI to drag FY24 growth. “The adverse impact of IT-related spending cuts should primarily be on discretionary spends, while cost optimisation and vendor consolidation related spends should remain the prime focus over the next 3-4 quarters. Though IT spends have remained resilient, rising interest rates and current trouble in the US banking system imply adverse near-term impact for IT spends,” it added.
