&w=1024&resize=1024,0&ssl=1 "Pressure mounts on Infosys and Wipro to exceed high expectations | market news")
By Harshita Swaminathan, Rachel Yeo, Reina Sasaki and Justina T. Lee
Infosys Ltd, Wipro Ltd and HCL Technologies Ltd defied lofty expectations as investors grew increasingly nervous about a potential market correction.
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Financial year 2025 is seen as a recovery for Indian IT companies after revenue growth fell to single digits in the previous year due to a slowdown in spending by US-based customers. Although the April-June quarter saw an improvement in profits, it may be difficult to beat higher expectations for the full year.
“While demand is improving, it is not exceeding existing estimates,” wrote analysts at HSBC Global Research. The recovery seen so far in banking, media and telecommunications will not be enough to defeat the consensus view, they said. Comments on the impact of rate cuts and the finalization of some U.S. agencies' 2025 budgets will be important.
This comes against a backdrop of projected market corrections in India following the Nifty 50's bull run over the past year, especially after larger rival Tata Consultancy Services Ltd missed earnings expectations to increase scrutiny over whether profits across the sector may justify costly assessments. Thursday
Elsewhere in Asia, the Taiwan Semiconductor Manufacturing Company and the contemporary Amperex Technology Company are also likely to face their own challenges. TSMC reported a better-than-expected 39 percent rise in quarterly revenue ahead of its full results, amid concerns about whether the AI-driven growth momentum will last. CATL overcame intense battery competition to accelerate profit growth.
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Saturday: Avenue Supermarts (DMART IN) likely posted double-digit profit growth in the second quarter, although slower store additions could weigh on future profits. The company has already reported a 14 percent increase in revenue from operations during the period, lower than Citi's estimate of 19 percent. Citi added that it is cautious about earnings because an unfavorable product mix could hurt gross margins.
Monday: HCL Technologies' (HCLT IN) full-year services revenue growth guidance is expected to be maintained between 3% and 5%, Nuvama Institutional Equities said. Bloomberg Intelligence said HCL's near-term expansion may be limited by cautious and discretionary IT spending by telecom, media and technology clients.
Reliance Industries' (RELIANCE IN) earnings were likely helped by Jio's price hike, making the digital services division's revenue the fastest growing among its verticals. Still, the core petrochemical business, which accounts for the majority of revenue, is expected to see a decline in profits. Refining margins are also expected to more than halve, MK Research analysts wrote.
Thursday: Infosys (INFO IN) is expected to raise its full-year revenue guidance, close to market consensus, while Wipro's (WPRO IN) report is expected to be less choppy. Comments on the scope of projects related to generative artificial intelligence will be closely monitored. Consensus estimates predict margins to expand for both companies, which MK Research analysts attribute to the absence of visa costs and industry-wide cost optimization measures.
TSMC (2330 TT) is expected to face challenges from weak demand for Apple Inc.'s iPhone 16, potentially hurting chip orders. Firm fourth-quarter revenue is expected to reiterate guidance, JPMorgan said. The delay in Nvidia Corp.'s Blackwell chips and how it will affect TSMC will also be in focus.
Nestlé India (Nest Inn) will likely report single-digit quarterly sales growth, consensus estimates show. Analysts at Motilal Oswal said the company may have implemented the price hike in response to rising commodity prices.
Friday: CATL (300750 CH) likely saw strong quarterly growth even as global battery demand and prices fell. The battery maker's scale and cost advantages contribute to margin stability, allowing it to withstand intense competition, while new growth is generated from the energy storage business, BI said. Building on the success of its electric vehicle batteries, the company has unveiled new technologies for heavy-duty vehicles.
