Now that the country’s top four IT exporters have delivered their respective Q2 figures, a common thread uniting them is the bullish trend in the top line. Each of the four companies reported sequential growth in dollar-denominated revenue for the September quarter after a six-quarter gap.
It last happened in the December 2022 quarter. The uptick indicates a gradual pick-up in project acceleration after a slower pace of execution in previous quarters. While IT companies were booking new orders, the delay in increases was affecting their revenue growth in the previous quarters.
The improving trend is also reflected in the year-on-year movement in revenue for the trailing 12 months (TTM). TTM incremental revenue for TCSInfosys and HCLTech started inching higher in the September quarter. After peaking in the March 2022 quarter, it gradually declined in subsequent quarters till September 2024 quarter. Furthermore, while Wipro continued to report a drop in TTM incremental revenue even in the last reported quarter, the The scope of the decline narrowed to $518.8 million from $550 million in the previous quarter. wear rate. Each of the four companies reported a sequential increase of between 10 and 40 basis points in attrition rates. While it is too early to predict whether this will continue in the coming quarters, it may indicate a gradual boost in hiring activities after a lull over the past few quarters. Additionally, TCS and Infosys reported sequential net addition of employees in the September quarter.Barring Infosys, other companies showed a sequential increase in winning new deals. Wipro saw a notable recovery: its TCV for new deals rose to $3,561 million from $3,284 million in the previous quarter, while TCV for large deals jumped to $1,489 million from $1,154 million.
For Infosys, after strong order flow of over $4 billion in the previous two quarters, the TCV for large deals stood at $2.4 billion. However, the company has increased the FY25 constant. badge revenue guidance to 3.75-4.5% growth from previous 3-4% growth, reflecting positive revenue momentum.
While these top IT exporters have started to show a better project delivery rate, their management comments continued to radiate cautious optimism. Customers continue to focus on improving cost efficiency, which may influence their decision making when planning annual IT budgets in a couple of months. Taking these factors into account, IT stocks They are expected to show limited movement in the short term.
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