Rating- attractive; IT services- Digital spending to continue in long term
时间:2024-09-29 02:29:59 阅读(143)
TCS and InfosyS both reported earnings with two common factors, though Infosys was a bigger surprise compared to TCS. These factors include a decline in demand from North America, with some discretionary programmes being put on hold or cancelled, as well as challenges in flexing margin levers due to sticky near-term costs at the start of a slowdown. While we acknowledge the heightened headwinds that may affect multiples in the near term, our long-term perspective on margins and growth remains unchanged. Stocks to avoid are the ones trading at premium multiples after assuming elevated growth and margin assumptions. The slowdown was sharper than expected. Infosys and TCS reported q-o-q revenue declines of 3.8% and 0.8%, respectively, in North America. The revenue decline in North America was across verticals on a sequential basis. The reasons for the decline were a pause in discretionary programmes and even cancellations. After a slow start in January, projects were paused in February and it continued in March.
The banking crisis in US regional banks and European banks in March 2023 has induced greater caution and could impact the June quarter. Kotak expects FY24 to remain weak for IT firms.
Also read: 2023 the likely end of conventional and dawn of new creator economy?
In response, companies may pursue cost optimisation measures, including opportunities related to cloud and SaaS consumption. TCS and Infosys are best positioned. HCLT and LTIM can benefit in select cases. Similar cost take-out opportunities, but among smaller enterprises may be addressable by a larger pool of companies. Many other companies will struggle—growth between leaders and laggards should widen in FY2024 and beyond.
猜你喜欢
- Nifty likely to rally if it holds above 18000; follow stock specific trading strategy to pocket gains
- Nifty needs to hold above 17300 for further upside; Watch Kotak Bank, HDFC AMC stocks for gains
- Nifty sits near crucial support levels, will bulls return today- 5 things to know before opening bell
- Buy these two stocks in July F&O expiry series; 15200 a ‘make or break’ level for Nifty in short term
- Nifty support at 16300 in this F&O expiry, use Iron Butterfly strategy; Bank Nifty to trade in 36000-33000
- A Cathie Wood ETF just overhauled its Bitcoin-related holdings
- Nifty needs to regain 17777 to attempt touching 18000, support at 17550; check stock to buy
- Bharat Heavy Electricals Rating- add- Q4 performance beat estimates
- Big blow to Gujarat govt! Supreme Court strikes down remission to 11 men in Bilkis Bano case, convicts to be back in jail