homemarket Newsstocks NewsIT largecap pecking order according to Macquarie — HCLTech, TCS, Infosys, Wipro
IT largecap pecking order according to Macquarie — HCLTech, TCS, Infosys, Wipro
Macquarie's Ravi Menon is optimistic about the IT sector and believes that companies have the potential to improve their margins and performance in the coming months. As always, it is important to keep an eye on the market and stay informed about any changes or developments in the industry.
India’s top IT services companies have reported strong earnings performance in the December quarter with the demand picture showing resilience but a near-term spending slowdown expected. Ravi Menon, IT and Technology Analyst at Macquarie Group, spoke with CNBC-TV18 about his outlook for the sector.
When it comes to largecap IT companies, Menon believes that the pecking order is as follows — HCLTech, Tata Consultancy Services (TCS), Infosys and Wipro.
He also mentioned that L&T Technology Services (LTTS), a company in the engineering R&D space, has a limited upside potential due to its current valuation.
IT giant, TCS reported a revenue of Rs 58,229 crore in the third quarter of the current financial year which was higher than the CNBC-TV18 poll. The management has maintained its exit margin guidance for the current financial year at 25 percent, despite the figure marginally missing estimates for the December quarter.
Also Read | TCS CEO explains why he is not overly worried about the global slowdown | Earnings interview
While sharing his outlook for the sector during the current recession, especially in Europe, he pointed out that the current recession is different from the Global Financial Crisis (GFC) of 2008 and that IT companies have significant headroom to improve utilisations, which will drive margin upgrades.
“We are positive on the sector overall. We think that this recession is very different from GFC, we don’t expect spending cuts to happen. We think it will be very minor,” he said.
Wipro reported its earnings numbers for quarter three of FY23. It is a subdued performance by Wipro. The quarter three revenues have come in lower than street expectations. The company has reported a constant currency revenue growth of 0.6 percent.
This compares with estimates of nearly a percent and typically Wipro should have reported growth numbers in the middle of their guided band but this time the topline growth of 0.6 percent in constant currency terms is at the lower end of their guided band of 0.5 percent to 2 percent.
Also Read | Wipro Q3 Result: March quarter guidance below expectations even as margin improves 120 basis points
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First Published: Jan 16, 2023 1:31 PM IST
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