BENGALURU: Though there will be seasonal furloughs, IT services firms are likely to perform better and will report improvement in growth momentum in the third quarter of this financial year.
Starting next week, IT firms will announce their December quarter results.
The country’s largest IT services firm Tata Consultancy Services will report its Q3 results on January 9 and the board will consider and approve the third interim dividend for FY25. The record date for dividend will be on January 17.
Emkay Global Financial Services in its research report said recovery in BFSI will aid growth, while weakness in manufacturing, mainly auto, is likely to weigh on growth. “BFSI is showing signs of healthy recovery, but uncertainties remain on pace of recovery in other verticals. Seasonal furloughs and lower working days should keep revenue growth muted on a QoQ basis,” it said.
HCLTech might lead organic revenue growth in tier-1 companies. It says the IT firm will raise its guidance to 4.5-5.5% (from 3.5-5%), factoring in CTG (Communications Technology Group) acquisition. In May, it acquired the CTG, a business division of HPE for $225 million. In Q2, Infosys revised its FY25 revenue guidance from 3-4% to 3.75-4.5% on the back of performance in Q2 and ramp up of mega deals pipeline. Emkay said in Q3, deal wins might remain similar to Q2. However, absence of mega deals and weak discretionary spending should continue to weigh on deal intake in Q3.
Brokerage firm Motilal Oswal Financial Services expects tier-2 firms to continue to outpace tier-1 firms in growth during third quarter. While the initial phase of recovery in 1HFY25 was sluggish, it sees clear signs of an acceleration. “Recovery appears to be expanding beyond US BFSI, which continues to strengthen, into additional industry verticals like Hi-Tech, which is recovering ahead of schedule. The most important catalyst for the sector would come after 3QFY25, when client budgets for CY25 would be finalised and the magnitude of change in client behavior would become clearer,” it said.