Infosys and HCL Tech shares see divergent moves post quarterly results — Here's why

Infosys Ltd. and HCLTech Ltd. find themselves on the opposite side of the Nifty 50 spectrum on Friday, post their September quarter earnings. While HCLTech is the top gainer on the index, Infosys happens to be the top loser and the top contributor to the index downside.

Both companies cut their full year revenue growth guidance post their respective earnings announcements. While Infosys now expects revenue to grow by 1% - 2.5% in financial year 2024 compared to 1% - 3.5% earlier, HCLTech now expects its topline to grow between 5% - 6%, including the ASAP acquisition, down from the 6% - 8% it guided for earlier.

Infosys cut its guidance due to the potential weakness it sees in the second half of the year, despite a strong first half. Growth for the Bengaluru-based IT major is seen between 0% to -2% in the second half of financial year 2024. On the other hand, HCLTech's growth is seen at 2.7% - 4% for the second half of the year.

This goes to show that while Infosys cut guidance due to potential weakness, HCLTech cut guidance due to the weakness that the company has already faced. The management is anticipating a strong second half of the year.

Both Infosys and HCLTech reported record deal wins during the quarter and also saw an expansion in their EBIT margin. But despite the cut in guidance, HCLTech will still remain the fastest growing company among its peers in the current financial year.

Watch: Apurva Prasad, Research Analyst at HDFC Securities, discussing Infosys and HCLTech's Q2FY24 results in an interview with CNBC-TV18.

Analysts believe that while HCLTech is likely to deliver at the higher end of the largecap growth projections in financial year 2024 and 2025, they don't quite have similar views for Infosys.

Citi even went on to say that despite strong deal wins, it is difficult to fully interpret growth projections due to absence of duration data. The brokerage even said that the Infosys management commentary indicates volume challenges and an uncertain near-term outlook.