&w=1024&resize=1024,0&ssl=1 "Pressure mounts on Infosys, Wipro to exceed high expectations | market news")
Authors: Harshita Swaminathan, Rachel Yeo, Reina Sasaki and Justina T. Lee
Infosys Ltd, Wipro Ltd and HCL Technologies Ltd failed to live up to high expectations as investors became increasingly anxious over a potential market correction.
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FY25 is seen as a revival for Indian IT companies after revenue growth in the previous year dipped to low single digits due to a slowdown in spending by US customers. While the April-June quarter brought improved results, higher expectations for the entire year may be difficult to beat.
“While demand is improving, it is not above existing estimates,” wrote analysts at HSBC Global Research. They stated that the recovery observed so far in banking, media and telecommunications will not be enough to overcome the consensus. Comments on the impact of interest rate cuts and the finalization of the budgets of some American agencies for 2025 will be important.
This comes against the backdrop of forecast market corrections in India following last year's Nifty 50 rally, particularly after larger rival Tata Consultancy Services Ltd missed earnings expectations, to increase scrutiny on whether sector-wide earnings can justify costly valuations. Thursday
Elsewhere in Asia, Taiwan's Semiconductor Manufacturing Company and the modern-day Amperex Technology Company are also likely to deal with their own challenges. TSMC reported a better-than-expected 39% increase in quarterly revenue ahead of full results amid concerns about whether its AI-powered growth momentum will be sustainable. CATL pushed through intense battery competition to accelerate earnings growth.
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Saturday: Avenue Supermarts ( DMART IN ) likely reported double-digit earnings growth in the second quarter, although slower store additions could weigh on future earnings. The company has already reported a 14 percent increase in operating income during the period, which is 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 guidance for services revenue growth is expected to be maintained at 3-5 percent, Nuvama Institutional Equities said. Bloomberg Intelligence says HCL's near-term growth may be limited by cautious discretionary IT spending by telecom, media and technology clients.
Reliance Industries' (RELIANCE IN) earnings were likely impacted by Jio's price hike, which saw its digital services division's revenue grow the fastest among its industries. Still, its core petrochemicals business, which generates the largest share of revenues, is likely to see earnings decline. Refining margins are also likely to fall by more than half, MK Research analysts wrote.
Thursday: Infosys (INFO IN) is widely expected to raise its full-year revenue forecasts, close to market consensus, while Wipro (WPRO IN) will report less eventfully. Comments on the scope of generative AI projects will be closely monitored. Consensus estimates predict that both companies' margins should increase, which analysts from MK Research attribute to the lack of visa costs and cost optimization measures across the sector.
TSMC (2330 TT) Expected to withstand challenges from weak demand for Apple Inc.'s iPhone 16, which could cause chip orders to decline. Solid fourth-quarter revenue is expected to be on par with forecasts, JPMorgan says. The delay in Nvidia Corp.'s Blackwell chips will also be in the spotlight. and its impact on TSMC.
Nestlé Indie (Nest Inn) likely to post single-digit quarterly sales growth, the consensus says. Motilal Oswal analysts say the company may have introduced the hike in response to rising commodity prices.
Friday: CATL (300750 CH) likely posted strong quarterly growth even as global battery demand and prices fell. BI says the battery maker's scale and cost advantages contribute to margin stability, allowing it to withstand intense competition while new growth is generated by its energy storage business. Building on the success of batteries for electric vehicles, the company presented new technologies for heavy vehicles.
