Infosys, TCS, HCL Tech, Wipro, TechM, LTIMindtree: Nifty IT index stocks that FPIs bought & sold in Q4

Out of 10 Nifty IT index constituents, foreign portfolio investors (FPIs) trimmed stakes in four IT stocks including Infosys, Mphasis and Tech Mahindra in the March quarter, data compiled from corporate database AceEquity suggests. L&T Technologies, HCL Technologies and LTIMindtree were among technology stocks where the institutional category raised stakes by over 100 basis points during the quarter.

Infosys

Among stocks they sold included Infosys, where FPIs cut their holdings to 35.08 per cent in the March quarter from 36.28 per cent in the December quarter, down 120 basis points. Not only Infosys' quarterly results came in less-than-expectations, its FY24 guidance of 4-7 per cent YoY constant currency (CC) revenue growth stood far lower than 13-15 per cent that it guided for FY23 at the start of the previous year. Infosys' net new deal wins for the March quarter at $440 million were the lowest reported number since the pandemic. Analysts said a widened FY24 revenue growth guidance band of 300 bps against the usual 200 bps represented higher uncertainty in the demand environment.

Mphasis

In Mphasis, FPIs cut stake by 117 basis points to 17.72 per cent from 18.89 per cent sequentially. This IT firm will announce its quarterly results on April 27. ICICI Securities sees revenue for the IT firm growing 8.9 per cent YoY to Rs 3,532 crore. Profit for the quarter is seen at Rs 420.80 crore. Ebit margin may come in at 15.9 per cent for the quarter against 16 per cent in December and 14.3 per cent in the same quarter last year, the brokerage said while expecting sales for the IT firm to degrow 0.9 per cent sequentially in CC terms.

Tech Mahindra

Tech Mahindra was another IT firm where FPI cut stakes by over 100 basis points. FPI holding in this IT stock dropped to 26.87 per cent from 27.95 per cent, down 1.08 per cent. TechM is seen as the only exception in the tier-I IT companies that may report a de-growth in sequential CC revenues. The IT major is seen reporting 13.6 per cent YoY (0.2 per cent QoQ) ise in net sales at Rs 13,760 crore. Profit is seen falling 13.9 per cent YoY to Rs 1,330 crore. Revenue in dollar terms may grow at 0.3 per cent, said Motilal Oswal Securities while the same brokerage expects revenue in CC terms to de-grow 0.7 per cent for the quarter.

Tata Consultancy Services (TCS)

TCS was the fourth Nifty IT index stock where FPI cut stakes in the March quarter. FPI holding in this IT firm got trimmed to 12.94 per cent from 13.05 per cent, down 11 basis points. Post soft March quarter results, a host of brokerages have cut cuts price targets on the stocks. Analysts said the near-term visibility on order flows stays low and that TCS' growth may lag that of peer Infosys going ahead. Their price targets vary from as low as Rs 2,638 to as high as Rs 3,860.

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LTTS, HCL Technologies

L&T Technology Services (LTTS) saw FPIs upping their stakes to 7.22 per cent from 6.04 per cent, up 118 basis points. On the other hand, HCL Technologies, which will report Q4 results on Thursday, saw FPIs increasing stake to 18.29 per cent from 17.17 per cent sequentially. Motilal Oswal said HCL Tech is one of the key beneficiaries of Cloud adoption at scale, given its expertise in IMS. That said, the IT firm's Q4 results are expected to impacted by software business seasonality. HCL Tech is expected to report a 20.3 per cent YoY (1.8 per cent QoQ) rise in revenue at Rs 27,180 crore. Profit is seen rising 9.6 per cent YoY to Rs 3,940 crore. Sequential dollar revenue growth is seen at 1.5 per cent while CC revenue growth is seen at 0.5 per cent.

LTIMindtree, Persistent, Coforge, Wipro

In LTIMindtree, FPIs upped stake by 108 basis points to 9.21 per cent from 8.13 per cent; In Persistent Systems, they increased stake to 20.28 per cent from 19.69 per cent while in Coforge, they upped stake to 21.30 per cent from 21.02 per cent. Meanwhile, FPIs raised stake in Wipro to 6.39 per cent from 6.30 per cent.

JM Financial expects Coforge to clock a 33.10 per cent YoY rise in net profit at Rs 276.50 crore compared with Rs 207.70 crore in the year-ago quarter. On the other hand, sales are seen rising 24.8 per cent YoY to Rs 2,175 crore from Rs 1,742.90 crore YoY. Dollar revenues are seen coming in at $264 million, up 4.3 per cent sequentially. Ebit margin, JM Financial said, may come in at 16.3 per cent against 15.2 per cent in December and 15.2 per cent in the year-ago quarter.

Motilal Oswal Securities expects Persistent Systems to report a profit of Rs 276.30 crore compared with Rs 201 crore in the year-ago quarter, up 36 per cent. Revenue is seen rising 37.2 per cent YoY to Rs 2,248 crore Rs 1,638 crore in the same quarter last year. Ebit margin is seen at 15.5 per cent against 14 per cent YoY.

ICICI Securities said LTIMindtree may report 0.5 per cent CC QoQ revenue growth with adjusted EBIT margin expansion of 200 bps QoQ. It sees profit at Rs 1,156 rcore, up 4.1 per cent over Rs 1,110.60 crore YoY. Revenue is seen at Rs 8,742.40 crore, up 21.4 per cent YoY.

The same brokerage expects Wipro’s revenue to decline 0.5 per cent QoQ CC in Q4FY23, translating to 11.5 per cent YoY CC growth in FY23E, near the lower end of the guided range of 11.5-12 per cent in FY23. It estimated 100 bps cross-currency revenue tailwind for Wipro. EBIT margin is expected to be largely flattish (20-30bps), QoQ. The brokerage expects Wipro to guide minus 1 per cent to 1 per cent QoQ CC revenue growth for Q1FY24.

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