JPMorgan anticipates tough fiscal year for Indian IT
NEW DELHI, INDIA — Financial services firm JPMorgan foresees a rough FY2024 for the Indian IT sector as foreign clients reduce technology expenditures.
According to the firm’s recent analysis, Indian IT giants like Infosys, Tata Consultancy Services (TCS), Wipro, and HCLTech voiced concerns about their clients — mainly from the United States (U.S.) — cutting back on IT expenses. The primary reasons cited include economic challenges and high interest rates.
JPMorgan analysts Ankur Rudra and Bhavik Mehta also mentioned a bearish industry outlook, pointing out that current conditions seem less promising than the previous quarter. The recent outperformance of the Nifty IT index over the Nifty 50 is attributed to investor sentiments, who view FY24 as a subdued year.
The upcoming earnings reports are expected to highlight deal signings and the ratio of new deals to renewals, offering insights into FY2025’s growth.
However, recent discussions with industry leaders haven’t showcased much optimism about a demand resurgence. As Rudra and Mehta remarked, “There are green shoots in certain paths, but overall decision-making and deal ramp-ups remain sluggish.”
While market expectations lean towards double-digit growth for large-cap IT firms in FY2025, JP Morgan expects high single-digit earnings growth for large-cap IT firms in fiscal 2025, while market expectations are double-digit growth. For mid-caps, it forecasts low double-digit growth versus market hopes of mid-teens growth.
