IT Services Q3 Results Preview - Furloughs, Lower Discretionary Spend To Impact Outlook: IDBI Capital

IDBI Capital Report

Weak macro, lower discretionary spend and furloughs to impact revenues of IT companies in Q3 FY24E. Delayed decision making, slower ramp up in deals, slower deal conversion, slowdown in discretionary spend, challenges in hi tech, retail and banking, financial services and insurance continues to be a broad commentary of IT companies.

The outlook of FY25E is riding on expectation of higher client budget, traction in generative AI and improving macro.

For Q3 FY24E, in terms of large caps we expect dollar revenue growth in the range of -2.5% - +3.9% QoQ offset by cross currency impact of ~35 basis points. Among mid-caps we expect -4.3% to +5% QoQ growth.

In terms of margins, we expect margins to dip across companies (except Coforge Ltd. Newgen Software Technologies Ltd.) mainly due to furloughs and wage hike in some cases.

We expect Sonata Software Ltd., Newgen and Coforge to report robust numbers. Newgen, Sonata and Cyient are our top picks.

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.