IT Sector Q4 Earnings Preview - Revenue Growth Persists’ Margins Lower On Cost Corrections: Anand Rathi
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Anand Rathi Report
We expect approximately 4.1% QoQ median Q4 growth (6.6% YoY), boosted by cross currency (euro/ pound) tailwinds (a ~70 basis point benefit) and appreciation in the dollar/rupee (~1.2% QoQ).
FY21 growth is likely to be ~5% (Q4 FY21 up 6.6% YoY, median).
Larsen and Toubro Infotech Ltd. and Mphasis Ltd. are likely to be growth leaders and mid-size Persistent Systems Ltd. and Firstsource Solutions Ltd. end up in the top quadrant.
In margins, companies are trending ~2.5% higher YoY (savings in travel, facilities, offshore) with Mindtree Ltd., Cyient Ltd., Mastek Ltd. and Intellect improving the most.
The sector, though, is likely to lose ~100bps in Q4 due to hiring and people retention.
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