Expect strong Q4 growth from Infosys, TCS and HCL Tech: Kotak Equities

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26 Aug, 2025 12:21

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Kotak Institutional Equities expects strong growth from Infosys, Tata Consultancy Services and HCL Technologies and muted growth from Wipro and Tech Mahindra for the fourth quarter.

"We expect constant currency revenue growth rate at 1.8-2.5 percent for Infosys, TCS and HCL Tech. On YoY comparison, revenue growth will be robust 10.8-13.8 percent for the three companies," Kotak said in a note.

According to the report, growth in the IT sector will be led by the increasing number of large deals won by companies over the past two quarters.

Tech Mahindra may report muted numbers due to seasonal weakness in retail and a slower manufacturing vertical. Meanwhile, Wipro will likely report a modest 1.5 percent sequential revenue growth.

The report further noted that despite currency depreciation, Infosys, Tech Mahindra and Wipro will report marginal sequential decline in EBIT margin.

"Sequentially, EBIT margin will decline marginally due to 1.9 percent appreciation of the INR against USD and talent constraint-led increase in cost structure in the US. Profitability performance will be a key focus area."

For FY20, the revenue growth guidance for Infosys is expected to be 8-10 percent, while HCL Tech has growth guidance outlook of 14-16 percent, including IBM’s product business acquisition, assuming it gets consolidated from July 2019.

The report also cautioned that sedated spending growth in FY20 will offset the benefit from a strong deal flow and increasing digital sizes in the IT sector.

Key focus areas:

-Demand from the banking vertical

-Profitability dynamics