New Delhi, May 10 As the IT sector goes through muted revenue growth, companies have become more conservative in their FY25 projections, baking in anticipated delays in executions and project closure activities, market analysts said on Friday.
The revenue growth outlook for FY25 has been discouraging, with tier-1 IT companies expected to report below mid-single digit growth on average, while tier-2 firms capping their revenue growth to high-single digits.
"However, if the spending recovery coexists with an anticipated macro recovery in the near-term, then we might see an upward revision to the estimates for the companies as they progress through the year," said analysts from financial services organisation Prabhudas Lilladher.
FY24 ended with another quarter of weak performance within IT services. Leading IT companies in the country saw a drop of nearly 70,000 employees in the last fiscal year.
Within tier-1, Tata Consultancy Services (TCS) relatively outperformed the peers and reported +1.1 per cent revenue growth (on-quarter), while HCLTech reported +0.3 per cent QoQ revenue growth.
On the other side, Infosys has been the outlier and reported another quarter of decline at 2.2 per cent QoQ in Q4, vs a decline of 1 per cent reported in Q3, said Prabhudas Lilladher.
IT major Wipro reported a 8 per cent dip in net profit at Rs 2,835 crore for the January-March quarter, compared to Rs 3,074.5 crore in the same period last year. The company's revenue fell 4.2 per cent to Rs 22,208.3 crore in Q4.
The IT services sector in the country is likely to see a second successive year of muted revenue growth, at 5-7 per cent in FY25, according to a latest Crisil Ratings report.
"Recovery hopes have been pushed back to FY26," said analysts at Kotak Securities.
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