IT Q3 Results Preview - Weak Quarter; Focus On CY24: HDFC Securities

NDTV Profit’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 NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..HDFC Securities Institutional Equities.The IT sector (coverage universe) is expected to post a weak quarter with a sequential decline. This is due to increased furloughs, Q3 seasonality, a prolonged deal conversion cycle, and compression in discretionary and renewals.Positive factors for the quarter include the ramp-up of mega deals (Bharat Sanchar Nigam Ltd./Verizon for Tata Consultancy Services Ltd./HCL Tech Ltd.) and consistent deal activity. However, most of the supply-side indicators, such as tech job postings, remain soft and do not signal any recovery ‘yet’.Although the recent trajectory of rates can support valuation multiples (high inverse correlation), it’s unlikely that tech budgets will improve materially.This is because a ‘slowdown’ in economic growth remains a baseline scenario, leading enterprises to prioritise cost optimisation over transformation initiatives. In the Indian IT landscape, we expect three developments: growth divergence within the sector in the near term,margin recovery with favorable supply-side factors, andmid-tier IT sustaining its relative outperformance.However, the margin of safety is low on aggregate, as valuations have approached plus 2 SD (rerated higher by greater then 20% in the last six months) with limited immediate upside triggers. We maintain our preference for LTIMindtree Ltd., Persistent Systems Ltd., and Birlasoft Ltd..Click on the attachment to read the full report:.IT, Telecom Q3 Results Preview - Seasonally Weak, Recovery Expected: Axis Securities.DISCLAIMERThis 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.

IT Q3 Results Preview - Weak Quarter; Focus On CY24: HDFC Securities

Although the recent trajectory of rates can support valuation multiples (high inverse correlation), it’s unlikely that tech budgets will improve materially.

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IT Q3 Results Preview - Weak Quarter; Focus On CY24: HDFC Securities

Although the recent trajectory of rates can support valuation multiples (high inverse correlation), it’s unlikely that tech budgets will improve materially.

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