BQ Prime’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 BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.
Axis Securities Report
IT services sector is expected to report muted growth in Q2 FY24 primarily on account of challenging times from the world’s largest economies. IT automation in North America and Europe may show delayed spend or may face some spend cuts going ahead.
We believe many large enterprises will shift their focus on cost optimisations resulting in higher cost take-out deals, vendor consolidation, and lower discretionary spending.
Banking, financial services and insurance, manufacturing, telecom, retail, and Hitech verticals are expected to be impacted by the slowdown, thus weakening FY24E growth momentum outlook.
We also believe that H2 may see a strong recovery. However, deal wins for the quarter will likely remain strong and will be aided by strong demand for newer technologies such as generative artificial intelligence, machine learning, cloud transformation, and digital transformations.
We expect IT services to report revenue growth in the range of -2%-1.0% QoQ in USD terms. In rupee terms, we expect the sector to deliver QoQ revenue growth of 1% to 8%. However, margins are likely to remain under pressure on account of salary revisions and higher employee costs during the quarter.
Telecom
Bharti Airtel - We expect Bharti Airtel Ltd. to post a healthy recovery in terms of curtailing losses and reporting a profit. Revenues are likely to grow by 2.9% QoQ, led by higher wireless revenues in India as well as in Africa.
Operating margins are likely to witness marginal expansion due to lower commission costs and sales advertising and marketing expenses.
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