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IT Services Q4 Earnings Preview - Supply-Side Constraints Persist; Demand Robust: Axis Securities

IT Services Q4 Earnings Preview - Supply-Side Constraints Persist; Demand Robust: Axis Securities

Employees working on their laptops in an office. (Photographer: Udit Kulshrestha/Bloomberg)
Employees working on their laptops in an office. (Photographer: Udit Kulshrestha/Bloomberg)

BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

Axis Securities Report

IT services sector is expected to report strong growth in Q4 FY22 primarily on account of the new large deal wins and a ramp-up of deals won in the previous quarter despite seasonality furloughs.

IT spending in North America and Europe has gained momentum and demand for digital transformation has increased exponentially.

Furthermore, improved macro-economic opportunities across the globe are expected to provide further growth impetus to the sector moving forward. However, supply-side constraints are likely to impact revenue growth momentum in the short term.

We expect IT services to report revenue growth in the range of 0.8%-8% QoQ in U.S. dollar terms. In rupee terms, we expect the sector to deliver QoQ revenue growth of 1% to 8%.

Margins for the majority of companies are likely to be impacted to the tune of 20 basis points–260 bps, largely due to the cross-currency impact.

Click on the attachment to read the full report:

Axis Securities IT Q4 FY22 Earnings Preview.pdf

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