HCLTech may outpace the growth in TCS and Infosys, says this analyst
Apurva Prasad of HDFC Securities expects the HCLTech to report the highest revenue growth among IT companies in Q3, at around 3.5% to 4% However, Tech Mahindra, Wipro, and Infosys may see a sequential decline. He also sees strong prospects for LTIMindtree.
The third quarter (October-December) earnings of India's top information technology (IT) companies is expected to be a mixed bag. According to Apurva Prasad of HDFC Securities, HCL Technologies (HCLTech) is likely to post better earnings than Tata Consultancy Services (TCS) or Infosys.
Prasad anticipates that HCLTech will showcase the highest growth in Q3, ranging between 3.5% and 4%. In contrast, he predicts a sequential decline for Tech Mahindra, Wipro, and Infosys.
Among other IT companies, Prasad believes LTIMindtree has the strongest prospects. He expects LTI to improve from a 6-7% growth rate this year to low teens, accompanied by mid-margin expansion.
As per a recent CNBC-TV18 poll, four of India's top six technology services companies -- Infosys., TCS., Wipro, and Tech Mahindra -- may post a decline in US dollar revenue during the December quarter.
The potential downturn is attributed to seasonality factors, higher-than-usual furloughs, and weakness in discretionary demand.
Among these four companies, Wipro is likely to see the steepest US Dollar revenue drop at 2.4% sequentially, while Infosys may report a revenue drop between 1.5% to 2%.
HCLTech is expected to benefit from the Verizon contract, the acquisition of ASAP and the seasonal strength in the products business.
In August last year, HCLTech had signed the contract with Verizon, which turned out to be the company's largest ever deal after the renewal with Xerox in 2019, which was valued at $1.3 billion.
Tata Consultancy Services will kickstart the Nifty 50 earnings season for the December quarter when it will report numbers on January 11, along with peer Infosys.
Shares of TCS were trading marginally up today at around ₹3,723 apiece, while Infosys stock was around a percent lower at ₹1,505 apiece on the NSE.
(Edited by : Shweta Mungre)
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