IT Sector Q1 Earnings Preview - Strong Revenue Growth Momentum May Continue: Anand Rathi
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Anand Rathi Report
Key trends and expectations -
IT companies’ YoY revenue growth bottomed out in Q1 FY21; accelerating since then; momentum likely to continue.
Cost-to-income ratios for direct and indirect costs – softened sharply but reversals have started in Q4 FY21 and may continue.
With cost-to-income ratios hardening, Ebitda margins coming under pressure; we expect this to continue.
The utilisation ratio has gone up in recent quarters. The possibility of a further rise looks limited. This can also impact employee productivity.
The segmental distribution of revenue shows increase in contribution of banking financial services and insurance and fall for transportation in the last four years.
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