00:00risks that we are seeing in terms of the food inflation, it's clear that the RBI will remain
00:06concerned regarding the 4% inflation target. And, of course, we have to put it in context
00:14that the growth continues to be as steady as it has been. So, that's where we are.
00:20Okay, Rajeev, I'd like to quickly request for your view as well on when you are anticipating
00:27the first rate cut. October seems to not be on the cards, possibly looking at the current
00:35growth inflation trajectory. But do you think there are greater chances of the first rate
00:43cut in the current cycle taking place in December? So, Pallavi, we are also expecting a rate cut
00:50most probably in December. But our view is a little different. I don't think by then,
00:56by December, RBI will be able to achieve 4% inflation target on a durable basis.
01:03So, that still looks very difficult to me. But I feel that if food inflation moderates, RBI may
01:11still cut the policy interest rate, even if the overall CPI inflation remains above 4%.
01:19Okay, all right. Let's shift focus to the IRP figures. So, while the IRP print does appear to
01:26be fairly strong at 5.9% for the month of May, manufacturing actually continues to lag in
01:34comparison. Mining has grown by about 6.6%, while manufacturing has grown by 4.6%. And we're seeing
01:43electricity having grown by 13.7% for the month. So, Subhadip, what are your views on manufacturing
01:54also in context of the upcoming budget? And given where we're seeing manufacturing at,
02:00do you think that thematically the government might announce more measures by way of more
02:06PLI schemes or in any other format which are specifically targeted at manufacturing?
02:13So, first of all, when we are looking at the IRP numbers, yes, they are strong,
02:18I mean, stronger than what was expected. So, I think that's a good print to start with.
02:24Specifically, electricity production being higher, I think that that's also to do with
02:28the month that we are in, May, the kind of heat pattern that we've seen. And in terms of the
02:35manufacturing, I don't think particularly it's a very weak number because seen in context of the
02:41last few months' data, I think that kind of trend we continue to see. Manufacturing has never shown
02:49a very large increase or spike of that sort. And if I remember correctly, the April number was
02:56close to 4%. So, we are in line with what we have seen over the last few months. And I would not
03:02particularly say that it's a very weak number or something. Yes, of course, it can be better.
03:07But we also have to keep in mind that when we are talking about the budget specifically,
03:15there are already the PLI scheme which has been put out, which does not necessarily have to be
03:19part of the budget. The PLI scheme is ongoing. Various sectors are seeing biddings happening
03:27in terms of the companies. Some of the CAPEX is already underway. So, I don't think particularly
03:34that there has to be a manufacturing-focused push through the PLI in the budget per se.
03:41Of course, tweaks and all can happen through the year. I think more importantly, if you are
03:47looking at manufacturing, I think it's more to do with the ease of doing business and the regulatory,
03:52the legal environment, compliance, et cetera, availability of labour and availability of
03:58quality labour. Those are the things that are more important for the manufacturing sector than
04:03through the budget where maybe some kind of financial help or fiscal allocation. I don't
04:08think that is needed per se from a budget perspective. Okay, all right. Rajni, coming back
04:15to you then. So, given that we are a few days away from the upcoming budget, what are your
04:25expectations? And also added to that, what are you making of the economy at this point in terms of
04:32momentum? We are expected to see a little bit of easing in growth for the full year compared
04:38to the last fiscal. But would it be fair to say that economic momentum remains intact?
04:44So, coming to your first question first, as far as budget expectations are concerned,
04:51a few things I would like to highlight. First, I think the government will continue with the
04:57focus on CAPEX that we have seen in the last few years. But I think overall the YUI growth
05:04in CAPEX would be around the same as what they had given in the interim budget.
05:09I don't see any increase beyond that. Secondly, I also feel that the government will continue
05:16the focus on fiscal consolidation, which again we have been seeing in the last few years. So,
05:21that's going to continue. Thirdly, I think this time there is also scope for government to
05:29also increase the revenue expenditure. The ratio of revenue expenditure to total expenditure
05:36could increase a little this time because there is need to boost consumption. There is concerns
05:43around what's happening to the agri and rural sector. So, there could be increased allocation
05:49towards those sectors. There are concerns around the employment generation. So, the government is
05:55likely to focus on labor-intensive sectors. So, broadly, we can expect increased allocation to
06:02some of these sectors, labor-intensive sectors, and some of the welfare schemes focused on
06:09these issues. So, broadly, these are the areas I think on which the government will focus.
06:17I think another important thing which the government should be looking at is how really
06:22to boost consumption. Because so far, if you see, the government has not announced any direct
06:30measure to boost consumption. And I don't think they will do that in the current, in the upcoming
06:36budget also. But I feel that is required and maybe the government should look at giving a stronger
06:42push to consumption boost in the economy. Because that will also ensure that private investment
06:48picks up, which is at the moment lacking. The other question as to what's happening to the
06:55economic momentum, I would say that yes, we are expecting some moderation in growth in FY25
07:02compared to FY24. And we also have to see as to where this growth is coming from. I would say
07:09while the overall 7% growth number is good if we achieve that in FY25, we still need to worry about
07:16weak consumption and relatively weak private investment. Okay. All right. Thank you so much
07:22for that, Rajni and Subhadip. IIP number surprise on the upside while inflation also proves to be
07:31a little bit of a surprise coming in a tad higher than estimated. Thank you so much for watching.
07:38And with that, let's actually shift focus to HCL tech numbers which are coming in as we speak.
07:44For more details on that, I'm joined by my colleague Rucha. Rucha, what are the numbers
07:48looking like? What's your quick takeaway? Yes. Hi, Pallavi. So numbers are just out.
07:53Revenue is largely in line with estimates. But what is interesting is the profit beat. So
07:59profit has come in at around 4,260 crores to be precise. But what was estimated was around
08:063,800 crores. So almost 11% more than what was estimated. But if we look at it in a quarter
08:13on quarter basis, we'll see revenue is down about 1.5% versus estimate of 1.6%. So largely in line
08:21revenue numbers. But if we talk about the profit numbers, profit was expected to be down about 3.5%.
08:29But interestingly, profit has come in as positive 7%. So this is what is interesting. Talking about
08:38EBIT margins, EBIT margin have come in in line with the estimates at 17.1%. But we'll definitely
08:46await for more data from the company wherein it will also mention about the guidance. Now talking
08:53about the services segment, as well as ER&D segment, we'll see that services segment largely
09:00almost flat around 1% down. ER&D is what was interesting, around 5% down. But we have more
09:08numbers from the company. Revenue guidance is over here, 3 to 5% YOY in constant currency terms
09:16is what the company has guided for FY25. Now this is in line with what the street was expecting.
09:25Street was expecting the company to maintain the guidance which it has, except one of the
09:29brokerage houses which are expecting an uptick. Talking about margin guidance, again the company
09:35has retained the EBIT margin guidance for FY25 at around 18 to 19%. But if we talk about deal
09:44wins, deal wins have come in at 1960, which is a tad lower than what we saw in the last quarter. We
09:53saw around 2300 in the last quarter, but deal wins have been soft. But this is what we also
09:58saw for TCS wherein deal wins are a little soft. But we have Mr. Omkar, Senior Research Analyst
10:07from Access Securities. Hi sir, welcome to the show. What are your take on the numbers that we've got?
10:14Yeah, I mean, from the prima facie, I believe that the numbers are much in line with expectations.
10:20We were expecting 2% decline in rupee terms and 1.7% in the dollar terms. So, it is largely in
10:31line with expectation that because they have already said in their con call that ramping down
10:37one large account on BFSI vertical. So, we were expecting the numbers to decline for this quarter.
10:44The margin came surprise. I mean, it has declined around 40 basis point. So, it is also one of the
10:52things that one should be looking for. The deal wins came much in line with expectations and
10:57continue to be strong with 2 billion deal wins that have cracked during the quarter. So, outlook
11:04seems to be like positive. Right sir, deal wins have come soft. What's your take on the deal wins
11:12ideally because deal wins were like an all-time high for IT companies during last few quarters.
11:17What's your take on deal wins or decline on a quarter-on-quarter basis? No, I don't think, I
11:22mean, they are declining sequentially. I mean, see, they already have the deals on their pipeline.
11:29But deals were either putting on hold or not ramping up or they are cancelling. But I believe
11:37it's what important is that they are ramping up the deals or not. But I believe slowly, slowly,
11:45the momentum is changing, the demand is changing up. Even if you can see one indicator that is
11:50indicating that they have added around 8,000 odd number of employees during the quarter,
12:00which seems like the ramp-up is near, which were slow in the previous quarters. But now,
12:08they are slowly ramping up, building the capacity to ramp up for the new deal wins.
12:13So, increased client engagement and outlook that must be looking for. I mean,
12:19we would love to hear from the management. And also, I mean, they have retained the guidance
12:25of 3% to 5%, which was as we were expecting. So, if you can see on QonQ from henceforth,
12:33the company is likely to deliver stronger revenue growth going ahead.
12:38Talking about the headcount numbers, headcount numbers have been a decline around 8,000
12:44odd people count over here. But even if we look at the reduction in headcount due to divestiture,
12:50it is around 7,300. So, again, if we exclude the divestiture effect, we will see a 1,000
12:57bit of net headcount reduction, which is as against TCS who added headcount this quarter.
13:03So, how do you look at the demand perspective overall for HCL Tech?
13:07See, I believe that they have the better, better composition as compared to the others
13:14in challenging times, because the investment was coming at ERND space, manufacturing vertical,
13:24and BFSI was a major laggard. That's why if you have seen HCL Tech has delivered stronger growth
13:29as compared to the TCS, Wipro, Infosys, and the Tech M. So, I believe in terms of service metrics,
13:38they have a product and platform business, which is very strong as compared to the Indian third
13:45quarters as compared to their Indian large-cap peers. So, I believe they have better composition
13:50in terms of overall business metrics. So, I believe it's going to deliver a better growth
13:58as compared to the believers even in FY25. So, even attrition has been at 12.8% versus
14:05around 12% that we can see last quarter. So, do you think this is the kind of range where
14:10companies will be able to maintain the attrition levels? Yeah, I mean, see, currently, I mean,
14:17they are going slow on hiring and the demand is going down. I mean, there is sluggish,
14:25but slowly, I believe, slowly the demand is going to pick up over the period of time,
14:30and I believe it's more to deliver. The attrition rate may rise due to higher,
14:36you know, the demand in next six months to eight months. But I am not worried much about the
14:42attrition rate. I believe it's more of, you know, onsite expenses, rising onsite expenses,
14:50and they are bargaining at the tendering offer and pricing pressure may impact the profitability
14:57going ahead rather than being the attrition is the major concern over the period, I mean,
15:01for the current scenario. Right. So, one last question from our end, the financial services
15:06segment, which accounts for majority of the company's revenues have come down on a YUI
15:11basis in constant currency terms. And this is what we saw for the major TCS as well. So,
15:16do you think financial services is yet to recover for the IT companies?
15:21No, I mean, it was expected, you know, because they have ramping down the last client account.
15:26So, it was very known thing during the quarter, but the outlook remain a key concern that we
15:33should be, you know, listening from the management, what is going to happen, how the client
15:38engagement is ramping up for the other client accounts. So, this was much expected. I'm not
15:43worried much about it, but one should have to listen what management is exactly saying about,
15:48you know, the outlook going ahead and existing last client account, whether there is an increase
15:55in the delay in decision making or the client engagement is increasing and any ramp up of the
16:01new deals that they have won. So, that might also create a billing in the following quarters. So,
16:07I believe the concern about the outlook from the management is quite necessary to understand.
16:16Right, sir. Thank you so much for joining us today. And that was Mr. Omkar from Access
16:21Securities. But do stay tuned to NDTV Profit, more interesting stories on the other side.
16:37Thank you.
17:07Thank you.
17:37Thank you.
18:07Thank you.
18:37Thank you.
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