TCS & Infosys may see 100 bps and 60 bps Sequential Improvement

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Some mid-caps, where salary hikes were not given in Q1 and were planned for Q2, could see a downside of around 90 to 100 bps.

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Such can be the case for the likes of MindTree and Persistent.

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But overall the bottom of margin is largely made, though the pace of recovery of margins would be slow," says Abhishek Bhandari, Senior Equity Research Analyst, Nomura.

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Some of the early indicators for the cautiousness are coming from the fact that the end-clients for the Fortune 2000 companies are slowing down on revenues.

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I think the companies will start talking more about clients trying to prioritise cost optimisation for the projects over the long-term digital projects in the real term.

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The companies which have given salary increments in Q1 are likely to see a significant improvement in margins though I would say the pace of recovery of margins

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Among the large-caps, we think TCS could have almost 100 bps sequential improvement and Infosys could have around 60 bps sequential improvement.

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Some mid-caps, where salary hikes were not given in Q1 and were planned for Q2, could see a downside of around 90 to 100 bps.

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