Earnings guidance from Indian IT outsourcing firms including Tata Consultancy Services Ltd and HCL Technologies Ltd will reveal how the much-awaited recovery is shaping up.
With US and European companies remain weary of spending on new projects, TCS and HCL have clung to outsourcing projects aimed at offering cost savings. TCS results next week should show that revenue growth picked up sequentially in the April-June quarter, consensus estimates show.
US-listed peer Accenture Plc’s management has indicated that the boom in generative artificial intelligence (AI) is acting as a catalyst for businesses to rethink and invest in their IT systems. That should create revenue opportunities for firms like TCS and HCL.
Over in Japan, Uniqlo-owner Fast Retailing Co, Ltd, and Ryohin Keikaku Co, Ltd, which owns the Muji brand, should both see double-digit operating profit growth in the quarter. Warmer temperatures boosted sales of spring-summer clothing, according to Bloomberg Intelligence.
Monday (July 8): LG Energy Solution’s second-quarter earnings may disappoint amid lower demand for electric vehicles (EVs) in Europe, HI Investment & Securities said. Demand from Tesla, a customer for its cylindrical battery, also fell short due to price competition from Chinese EV makers. It’s rushing to commercialise battery technology that will fend off Chinese rivals.
Thursday (July 11): Tata Consultancy Services’ (TCS) quarterly profit should grow 8.3%, as the earnings recovery begins to take shape in the Indian IT space. Salary hikes should hurt margins compared with a quarter ago, though the pace of wage increases slowed, analysts at Prabhudas Lilladher said. TCS probably added more than 10,000 employees from a quarter ago, the first sequential headcount growth in a year. Watch for commentary on financial sector clients, which account for almost a third of revenue and have been a large part of the recent slowdown.
Friday (July 12): HCL Technologies’ first-quarter earnings should be supported by robust revenue growth in the IT & business and engineering, & R&D services units, consensus shows. It’s expected to repeat 2025 revenue growth guidance of 3%-5% at constant currencies, according to Nomura. Jefferies said a near-term growth recovery is unlikely, as discretionary IT spending remains muted.
- Bloomberg
Created by Tan KW | Jul 28, 2024
Created by Tan KW | Jul 28, 2024
Created by Tan KW | Jul 28, 2024
Created by Tan KW | Jul 28, 2024