IT Services Q1 Results Review And Outlook – Improved Near-Term Visibility: Axis Securities

Axis Securities Report

After strong revenue growth momentum in FY22 and FY23, IT services are likely to face challenges in demand and margins due to the economic slowdown and macroeconomic uncertainties.

Despite these challenges, the near term outlook remains positive with improving demand across geographies.

Deal wins have remained resilient even during difficult times, reinforcing confidence that automation spending will rebound in the next couple of quarters. Demand in sectors such as retail and manufacturing remains robust and is expected to regain momentum soon.

Demand for newer technology services like generative AI, machine learning, IoT, and cloud transformations remains stable and is anticipated to recover more swiftly as certain macroeconomic challenges ease.

The company expects most IT services firms to regain momentum within the next couple of quarters as deal wins continue to be strong and supply-side constraints ease.

A dovish stance by the Federal Reserve may further support macroeconomic conditions in North America, driving demand for automation spending.

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