Indian IT Services: Where are we in the growth cycle?
Technology
The large Indian IT services companies experienced an elaborated revenue growth cycle from the Covid pandemic lows peaking during mid-2022 with above-average constant currency Y/Y growth rates. This was followed by a sharp correction during 2023 with Wipro significantly underperforming its peers. Infosys has also lagged both Tata Consultancy Services and HCL Technologies. While 4Q24 results recently showed the first signs of a bottoming in the growth rates, leading to anticipation in the market that we should see an acceleration over the medium term, based on current valuation levels Wium Malan finds very little upside for these stocks.
Edition: 185
- 03 May, 2024
Indian IT Services
Technology
Following the purple patch of growth experienced in the wake of accelerated digitisation following the global pandemic, revenue growth has continued to slow down. Operating margin deterioration has also continued, despite significant FX tailwinds, largely due to the inflationary impact of increased employee attrition rates (to record levels) across the industry. Given weakening near-term growth prospects and above-fair valuation levels, Wium Malan remains cautious on the sector. In this insight, he focuses on the four largest companies in the sector - Tata Consultancy Services, Infosys, HCL Technologies and Wipro.
Edition: 148
- 11 November, 2022
Indian IT Services: Unattractive outlook
Technology
Will increased dividends and buybacks be sufficient to support current elevated valuation levels? Following 2 years of exceptional performance driven by accelerated digitalisation in the wake of the Covid pandemic share prices have started to correct. While demand remains robust, revenue and earnings growth rates are decelerating. Wium Malan's report focuses on the prospects of the 4 largest companies in the sector - Tata Consultancy Services, Infosys, HCL Technologies and Wipro.
Edition: 129
- 18 February, 2022