Revenue forecast on TCS, Wipro, Infosys, HCL and Tech Mahindra

Kotak has revealed its revenue outlook on Indian IT services companies such as TCS, Wipro, Infosys, HCL Technologies and Tech Mahindra.
IT services India companies


TCS will likely report reasonable growth with challenges in financial services and retail verticals.

TCS will achieve constant currency revenue growth of 2.6 percent and cross currency headwind of 75bps on a qoq basis. 2QFY19 has a high revenue base and will likely result in a deceleration in yoy c/c growth to a single digit. TCS will face moderation in growth from financial services vertical while client specific challenges can also impact the retail vertical. TCS will have healthy revenue growth in other verticals.

TCS will face EBIT margin to expand 150 bps qoq but decline 80 bps yoy. Marginal Rupee depreciation, absorption of wage revisions and higher billing days will lead to sequential increase in EBIT margin. There will be yoy decline in margins largely to increase in US cost structure.


Wipro will disappoint with weak revenue growth. Wipro will achieve constant currency revenue growth of 1.2 percent and cross-currency headwind of 70bps on a qoq basis. Wipro will face weak growth from the financial services vertical and steady growth in others. Wage revision will likely lead to decline in EBIT margin. Reported EBIT margin will increase by 324 bps on yoy comparison largely on account of 360 bps impact from the settlement of lawsuit with National Grid in Sep 2018 quarter.

Wipro’s revenue growth will be impacted by cautious spending of Europe banking and capital market clients.


Infosys will likely impress with strong revenue growth and increase in guidance. Infosys will achieve constant currency revenue growth of 3.5 percent and cross-currency headwind of 60 bps on a qoq basis. Infosys will have sequential EBIT margin improvement of 80 bps and yoy decline of 245 bps. Sequential improvement in EBIT margin will be led by lower visa cost tailwind of 80 bps, and marginal benefit of Rupee depreciation.

Infosys may tighten revenue growth guidance to 9.5-10.5 percent from 8.5-10 percent earlier as strong large deal momentum and market share gains give visibility to revenue growth.

HCL Technologies

HCL Technologies revenue growth and profitability will be boosted by completion of IBM acquisition. HCL Technologies will achieve constant currency revenue growth rate of 5.7 percent of which 0.7 percent will be organic with the balance contribution from completion of acquisition of select IBM products.  HCL Technologies will achieve EBIT margin of 18.5-19.5 percent range. HCL Technologies may retain 14-16 percent revenue growth guidance. HCL Technologies may also retain organic revenue growth guidance of 8-10 percent and EBIT margin guidance of 18.5-19.5 percent.

Tech Mahindra

Tech Mahindra will likely report modest revenue growth and weak margins. Tech Mahindra will achieve sequential constant currency revenue growth of 1.7 percent and a cross currency headwind of 80 bps. Tech Mahindra’s revenue growth will be led entirely by communications practice. Growth in enterprise segment will be muted due to ramp down from automotive customers.

Despite seasonal increase in margin of portfolio companies and lower visa costs, margin improvement in the quarter will likely be limited as transition costs of large deal with AT&T and enterprise customers to weigh on EBIT margin, the report said.