IT Results Preview - Healthy Q1 Expected; Focus Shifts To Operating Margin Sustenance: Dolat Capital
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Dolat Capital Report
As indicated in the FY22 guidance and strong deal wins in FY21, Indian IT services vendors are likely to witness organic revenue growth of ~2.3%- 4.1% QoQ in constant currency terms for Q4FY21 (reported revenue growth for Coforge Ltd. and Wipro Ltd. is expected to be at 11.1% and 9.6% QoQ including inorganic component).
Growth will be led by ramp up of deal wins from H2FY21 and consolidation of acquisitions for some players. Growth commentary is likely to stay strong as evident from strong order bookings.
Profitability for the quarter is likely to decline for most names in our coverage, as they face wage hikes impact and strong incremental lateral hiring impact (as utilisation levels are unsustainable). Expect some gradual normalization of discretionary/growth spends.
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