Infosys, Tech Mahindra among 6 IT stocks that could surprise positively in Q1 results: JM Financial

JM Financial in its report also said that the current demand environment is difficult to call and first quarter headline numbers are unlikely to give away any clue either. However, they expect -2% to +2.1% cc QoQ growth print for large-caps.

The domestic brokerage firm states that it will likely be a quarter of middling growth, especially when approximately 50 bps could be added by a higher number of working days alone.

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“Investors should therefore read between the line (items) to gauge demand. Sequential improvement in BFSI, stability in Telecom/Hi-tech could be positive signs. Pick-up in attrition, moderation in decline would also signal trough formation. Global cues have been incrementally positive,” said Abhishek Kumar, Analyst at JM Financial.

For select mid-caps, growth might accelerate and Kumar expects Persistent Systems and KPIT to report an impressive 5.5%/4.6% cc QoQ growth.

Most global peers held their guidance in the latest quarter. Cognizant Technology Services suggested they will now land in the upper half of their 2Q guide, recommending no incremental deterioration. Therefore, no changes to Indian peers’ FY24 guidance is also anticipated.

Commentary around stressed verticals like BFSI, Telecom and HiTech could be useful to gauge demand stability. Manpower metrics like rise in attrition and moderation/reversal of net headcount decline could be early signs of demand uptick, said the domestic brokerage firm.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)