IT Sector Check - Another Standout Quarter; Another Upgrade: Motilal Oswal
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Motilal Oswal Report
The IT sector's performance over the past year has been outstanding; the sector has deservedly been re-rated - companies have paid out more than 85% of free cash flow to shareholders, had net-cash balance sheets, and commands return on equities of 25–40%.
The Q3 FY21 results season has thus far beaten expectations, with the IT companies delivering stellar results.
IT service companies delivered sequential growth of 3-5% in QoQ constant currency terms in Q3 FY21, aided by broad-based growth across geographies and verticals.
This was meaningfully ahead of our estimates, indicating an uptick in technology spends by corporates.
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