Result Preview - Information Technology - ICICI Direct

Normally, this quarter is seasonally weak due to furloughs. However, this year we believe there will be an aberration to this trend. We expect companies to report healthy revenue growth in this quarter led by lower furloughs, improvement in demand post Covid-19 and ramp up of deals won in the previous quarters. This, coupled with cross currency tailwind, will further boost revenue growth in the quarter. The companies are also seeing a demand tailwind in terms of cost takeout by clients (led by higher offshoring & automation), vendor consolidation opportunities, captive carve outs and traction in cloud & customer experience that could further propel demand in coming quarters. In terms of margins, we expect them to remain stable (barring TCS, HCL Tech & Coforge) mainly due to cross currency benefits, lower furloughs, offshoring partially offset by rupee appreciation.

In midcap, Mindtree to report healthy margins

Midcap companies are expected to report 3-45 bps improvement in EBITDA margins, with Mindtree leading margin growth with 45 bps QoQ improvement. However, Coforge is expected to register 75 bps QoQ decline in EBITDA margins mainly due to negative operating leverage.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_IT_Q3FY21.pdf

Source : Equity Bulls

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