According to BofA Securities, favourable foreign exchange movements are likely to provide a 100 basis point tailwind to profitability in the current quarter.
However, the brokerage expects companies to pass on only a part of these gains to the profit and loss statement, choosing instead to reinvest and strengthen capabilities.
The forex tailwind is also expected to offer a cushion to profitability and earnings expectations for FY27.
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BofA Securities expects Infosys to retain its EBIT margin guidance in the 20%-22% band, with FY27 revenue growth seen at 1.5%-4.5% year-on-year in constant currency terms.
For HCLTech, revenue growth guidance is estimated at 2.5%-5.5% year-on-year in constant currency.
The brokerage said that Infosys’ acquisition of Versent, as well as HCLTech’s acquisition of Jaspersoft and certain telecom software assets from Hewlett Packard Enterprise, are yet to close.
Early completion of these deals in FY27 could add around 0.7% and 1.5% to their respective annual growth outlooks.
Expectations for Infosys remain muted following recent developments around contracts with Daimler and Vanguard, and the brokerage believes that both the Q4 earnings print and FY27 revenue guidance could be positively received.
For Wipro, a Q4 revenue outlook of a 2% decline to flat sequential growth may limit near-term upside.
|
Cos
|
Rev CC % QoQ
|
EBIT % (Actual)
|
EBIT Change (QoQ bps)
|
|
TCS
|
1.3%
|
25.4%
|
+19
|
|
Infosys
|
-0.5%
|
21.5%
|
+30
|
|
HCL Tech
|
-0.8%
|
17.7%
|
-90
|
|
Wipro
|
1.6%
|
17.8%
|
+16
|
|
TechM
|
1.1%
|
14.0%
|
+84
|
Among peers, TCS is expected to see a 40 basis point inorganic contribution to growth, while Wipro’s 1.6% sequential growth is entirely inorganic. On an organic basis, Wipro is expected to decline 1.1%, factoring in a 2.4% contribution from the Harman acquisition.
|
Cos
|
Rev CC % QoQ
|
EBIT % (Actual)
|
EBIT Change (QoQ bps)
|
|
LTTS
|
3.4%
|
15.1%
|
+54
|
|
Tata Tech
|
10.4%
|
14.4%
|
+180
|
Meanwhile, Tata Technologies Ltd is expected to report around 5% inorganic contribution to growth.
