IT Sector Check - Raising Stance To Overweight; Deceleration Gradient Looks Benign In FY23: Nirmal Bang
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Nirmal Bang Report
We are turning incrementally more positive on tier-I Indian IT. The deceleration in growth rate expected in FY23 is not likely to be as significant as we/street had expected earlier.
Discussions with companies during the course of the quarter indicate demand pipeline being at the highest ever level despite strong order inflow by almost all companies (ex–mega deals) in the last 12 months. That it is a multi-year growth acceleration has been known for a while, the question has always been about the precise strength and longevity.
The September 2021 quarter results and commentary of most companies thereafter indicate that the sharp ~500-700 basis points deceleration expected by the street in dollar organic revenue growth in FY23 was likely excessive.
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