IT Services Q2 Earnings Preview - Exceptionally Strong Quarter: Prabhudas Lilladher
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Prabhudas Lilladher Report
We estimate Q2 FY22 revenue growth between 5.0%-7.4% QoQ constant currency (average:5.8%) for tier-I and 5.5%-9.0% QoQ CC (average: 7.1%) for tier-II.
There is cross-currency headwind of 20-90 basis points due to appreciation of U.S. dollar against pound, euro, and Australian dollar.
We believe IT services companies will post a robust quarter led by-
ramp up of large deals,
strong growth momentum from core verticals (banking, financial services and insurance, retail)
broad-based growth momentum and
tailwinds from cloud transformation journey.
We also anticipate pressure on operating margins given-
increased level of sub-contracting caused by strong demand,
high attrition and
investment in large deals.
We believe margins will likely recover from Q3, aided by revenue growth leverage.
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