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IT Services Q2 Earnings Preview - Exceptionally Strong Quarter: Prabhudas Lilladher

IT Services Q2 Earnings Preview - Exceptionally Strong Quarter: Prabhudas Lilladher

A software developer works on a laptop computer. (Photographer: Christopher Lee/Bloomberg)
A software developer works on a laptop computer. (Photographer: Christopher Lee/Bloomberg)

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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-

  1. ramp up of large deals,

  2. strong growth momentum from core verticals (banking, financial services and insurance, retail)

  3. broad-based growth momentum and

  4. tailwinds from cloud transformation journey.

We also anticipate pressure on operating margins given-

  1. increased level of sub-contracting caused by strong demand,

  2. wage hikes,

  3. high attrition and

  4. investment in large deals.

We believe margins will likely recover from Q3, aided by revenue growth leverage.

Click on the attachment to read the full report:

Prabhudas Lilladher IT Services Q2 FY22 Earnings Preview.pdf

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