Read-across for IT services coverage: The print suggests that the momentum within outsourcing growth stood elevated in 4Q both in terms of revenues (+7% YoY CC) and bookings (41% YoY CC). The vertical and geo performance also remained broad-based, while Communications growth improved by 5% YoY CC, after five consecutive quarters of decline. Although the growth of Fin. Services declined YoY in 4Q, the pace of deceleration has moderated to a large extent. However, on the FY25 guidance, we believe the street is over-optimistic and building revenue growth (6% YoY) at the upper-end of the guidance band, hence there is a downside risk to the consensus.
• Revenue at US$ 16.4 bn, up 2.6% YoY (+5.0 CC YoY) vs in line with the estimates and at the mid-range of the guidance
• Outsourcing revenue (50% of mix) came at US$ 8.26 bn, up 1.7% YoY (+7% CC YoY) while Consulting revenue (50% of mix) came at US$ 8.14 bn, down 2.3% YoY (+3% CC YoY)
• FY25 revenue guidance at 3-6% CC YoY, whereas the street the is already at the upper-end of the guidance band
• Q1FY25 revenue guidance of US$ 16.85- 17.45 bn, guidance band of 2-6% YoY growth with 1.5% impact of forex, while the street is tad below the upper-end of the guidance band
• Adj. EBIT margin for Q4 came at 15.0% (+10 bps QoQ) and maintained FY24 EBIT margin at 14.8%. For the FY25, the company expects expansion of 10-30bps (adjusted) YoY GAAP
• New booking grew by strong 21% YoY (+24% CC YoY) to US$ 20.1 bn, outsourcing bookings came at US$ 11.5 bn up 41% YoY growth while consulting business reported weak bookings of US$ 8.6 bn a marginal growth of 1% YoY
• Gen AI booking came at US$ 1bn & full year bookings came at US$ 3 bn,
• Segment wise Health & Public services continued to lead the growth, it grew by 11% YoY CC while CMT reported growth (+5% YoY in CC) after five consecutive quarters of decline, while the pace of deceleration within Financial Services has moderated, declined by 2% YoY CC,
• Geography wise North America continued its growth momentum, grew by 6% YoY CC, while EMEA grew by 2% YoY CC after two consecutive quarters of decline