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Infosys is up against high expectations as investors increasingly fret over a potential market correction. | Representational
By Harshita Swaminathan, Rachel Yeo, Reina Sasaki and Justina T Lee
Infosys Ltd., Wipro Ltd. and HCL Technologies Ltd. are up against high expectations as investors increasingly fret over a potential market correction.
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The 2025 financial year has been seen as one of recovery for Indian IT companies after a slowdown in spending from US-based clients brought revenue growth down to the low single-digits in the previous year. While April-June quarter earnings did show an improvement, elevated full-year expectations might prove hard to beat.
“While demand is improving, it is not beating existing estimates,” analysts at HSBC Global Research wrote. The recovery seen so far in banking, media and telecommunications won’t be enough to beat consensus views, they said. Commentary on the effects of rate cuts and the finalization of 2025 budgets from some US firms will be key.
This is against a backdrop of speculation of a looming market correction in India, amplifying the scrutiny on whether earnings across sectors can justify expensive valuations after the Nifty 50’s bull run in the past year, especially after larger rival Tata Consultancy Services Ltd. missed profit expectations on Thursday.
Elsewhere in Asia, Taiwan Semiconductor Manufacturing Co. and Contemporary Amperex Technology Co. also likely emerged from their own challenges. TSMC saw a better-than-expected 39 per cent rise in quarterly revenue ahead of its full results, amid concerns on whether AI-driven growth momentum will last. CATL is set to have pushed through intense battery competition to post accelerating profit growth.
Highlights to look out for:
Saturday: Avenue Supermarts (DMART IN) likely saw double-digit profit growth in the second quarter, although slower store additions may affect future earnings. The company already reported a 14 per cent rise in revenue from operations in the period, lower than Citi’s estimate of 19 per cent. Citi added it’s cautious about earnings as an adverse product mix may have hurt the gross margin.
Monday: HCL Technologies (HCLT IN) should maintain full-year services revenue growth guidance of 3 per cent to 5 per cent, Nuvama Institutional Equities said. HCL’s near-term expansion may be held back by cautious discretionary IT spending by telecommunications, media and technology clients, Bloomberg Intelligence said.
Reliance Industries’ (RELIANCE IN) earnings were likely helped by Jio’s price hikes, which made the digital services segment’s revenue the fastest-growing among all its verticals. Still, the mainstay petrochemicals businesses, which brings in the biggest revenue share, likely saw profit dip. Refining margins also probably more than halved, analysts at Emkay Research wrote.
Thursday: Infosys (INFO IN) is widely expected to raise its full-year revenue guidance closer to market consensus, while Wipro’s (WPRO IN) report is expected to be less eventful. Commentary on opportunities for projects related to generative artificial intelligence will be closely watched. Consensus estimates predict margins should expand for both companies, which analysts at Emkay Research attribute to absence of visa costs and expense-optimization measures across the sector.
TSMC (2330 TT) is expected to weather challenges from softer demand for Apple Inc.’s iPhone 16, potentially denting chip orders. The firm is expected to reiterate healthy fourth-quarter revenue guidance, JPMorgan said. Delays in Nvidia Corp.’s Blackwell chips and how that would impact TSMC will also be in focus.
Nestle India (NEST IN) will probably report single-digit quarterly sales growth, consensus estimates show. The firm likely implemented price hikes in response to rising commodity prices, analysts at Motilal Oswal said.
Friday: CATL (300750 CH) probably saw strong quarterly growth, even as global battery demand and prices fell. The battery manufacturing company’s scale and cost advantages contributed to margin stability, allowing it to fend off intense competition, while new growth is generated from the energy-storage business, said BI. Building on its electric car battery success, the firm has unveiled new technologies for heavy-duty vehicles.
First Published: Oct 11 2024 | 7:38 AM IST
