TCS buyback: Tata Consultancy Service, on Wednesday, announced its fifth buyback in six years. The IT giant also announced its Q2FY24 financial result today
“The challenges which the IT companies had still continue. They have worked very hard to ensure the cost escalation does not happen. They have also worked towards gaining large orders.”
Though the top tier firms have been announcing large deal wins over the past few weeks, brokerages believe they are unlikely to translate into a major change in revenue growth forecast of the Indian IT firms.
According to Sudip Bandyopadhyay of Inditrade Capital, the outsourcing and contracting industry is under pressure, but some large IT companies have started winning big orders from different geographies, indicating the beginning of a recovery phase in their earnings. He believes that the recent block deals and IPO subscriptions are not a cause for concern, but rather a sign of liquidity in the market. Bandyopadhyay also discusses HDFC Bank and its potential to outperform its private sector peers in the coming months, as well as the outlook for the IT sector, stating that the worst may be over and a recovery phase is beginning.
According to analysts, while the top IT firms are likely to face multiple headwinds, factors such as regular execution of smaller deals, frequently billable projects and a smaller revenue base could work in favour of mid-cap IT firms.