Goldman cuts Infosys, TCS to ‘sell’ on looming slowdown, upgrades Wipro





downgraded top Indian information technology service providers Tata Consultancy Services and to “sell,” from “buy,” citing a potential slowdown in dollar revenue growth in the face of impending macroeconomic stress.


“We believe a slowdown in discretionary IT services spend around the growth and transformation agenda will be quite material and something not yet completely reflected in the street’s double-digit revenue growth forecast for the industry for FY24,” Goldman analysts said in a note.


Goldman said it remains “more sanguine” on the EBIT margin forecasts than on revenue of Indian IT companies, given multiple levers such as higher employee utilisation, controls on variable pay and annual wage hikes.


India’s top IT services firms have started freezing or cutting staff bonuses, worried that tightening budgets at U.S. and European clients who are bracing for a recession will sharply hit their own profit as the pandemic-led boom fades out.


The IT firms made a windfall when pandemic struck the world couple of years back as several global corporations poured millions of dollars to rev up their digital infrastructure.


However, several top tier companies missed profit estimates in the April-June quarter due to higher costs.


Goldman upgraded to “buy” from “sell,” citing attractive valuations and a recent pickup in the company’s order book.


The Nifty IT index was down 3.1% on Wednesday as a surprise increase in U.S. inflation stoked fears of aggressive rate hikes by the Federal Reserve.


The IT index has been one of the worst hit sectors, falling over 27% so far this year, underperforming benchmark Nifty 50 index, which is up 4%.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor





Source link

Comments are closed.