TCS's financial results, due this week, are expected to show faster revenue growth in the April-June quarter compared to the previous quarter, according to consensus estimates.
 "TCS, HCL revenue recovery likely to be further driven by growing demand for AI")
Bloomberg
Harshita Swaminathan, Rachel Yeo, Reina Sasaki, Justina T. Lee
Outlook for Indian IT outsourcing companies such as Tata Consultancy Services and HCL Technologies will shed light on how the much-awaited recovery is progressing.
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TCS and HCL are sticking to outsourcing projects to cut costs as U.S. and European companies remain reluctant to spend on new projects. TCS's results, due this week, are expected to show faster revenue growth in the April-June quarter compared with the previous quarter, according to consensus estimates.
Executives at U.S.-listed peer Accenture have suggested the boom in generative artificial intelligence is prompting companies to rethink and invest in their IT systems, which should create revenue opportunities for companies like TCS and HCL.
In Japan, Fast Retailing Co., which owns Uniqlo, and Ryohin Keikaku Co., which owns the Muji brand, both forecast double-digit increases in operating profit for the quarter, citing rising temperatures boosting sales of spring and summer clothing, according to Bloomberg Intelligence.
Meanwhile, South Korea's LG Energy Solutions' provisional second-quarter operating profit fell short of expectations as electric vehicle sales continued to slow.
Notable highlights:
ThursdayTata Consultancy Services (TCS IN) quarterly profit is expected to grow 8% as a revenue recovery starts to take shape in India's IT industry. Analyst Prabhudas Lilladher noted that salary increases will weigh on margins compared to the previous quarter, but the pace of wage growth has slowed. TCS is likely to have added over 10,000 employees since the previous quarter, marking its first consecutive employee growth in a year. Noteworthy comments on financial sector clients, which account for nearly a third of revenue and have been a major contributor to the recent economic slowdown.
Fast Retailing Co.'s (9983 JP) third-quarter operating profit probably rose 12%. SMBC Nikko Securities said sales in East and Southeast Asia would grow if economic conditions improved. The brokerage added that operating margins in China would come under scrutiny amid weak consumer sentiment. The company is also betting on new technologies, such as barcode-free cash registers, to help it reach its target of 10 trillion yen ($62 billion) in annual sales.
Seven & i's (3382 JP) first-quarter operating profit is expected to fall 7.7% compared to consensus estimates after domestic and overseas sales slumped in March and April. SMBC Nikko Securities said its overseas business could achieve its operating profit growth target of 4% for fiscal 2025, helped by higher gasoline sales volume from 204 new stores and a slight increase in gross profit.
Friday: Consensus suggests HCL Technologies' (HCLT IN) first-quarter profit will be supported by solid revenue growth in its IT & Business, Engineering & R&D services divisions. The company is expected to maintain its 2025 revenue growth guidance of 3-5% at constant exchange rates, according to Nomura. Jefferies said a near-term growth recovery is unlikely as discretionary IT spending remains subdued.
Ryohin Keikaku (7453 JP) is expected to post a 15% rise in quarterly operating profit as warmer temperatures boost sales of spring and summer clothing. Jefferies analysts said in a June 10 report that while its China business has struggled, it is still outperforming China's general apparel market. BI said Muji's parent company may add more affordable items to its lineup to compete with local rivals such as Minisou and hit its full-year profit target.
