Q4FY21 Result Preview - Information Technology - ICCI Direct

Acceleration in digital technologies, improved demand post Covid-19, ramp up of previous deal wins and migration to cloud are driving revenues of IT companies. Hence, we expect IT companies to report healthy Q4FY21E revenues. We believe improved traction in BFSI, retail, manufacturing, hi tech and life-science will drive revenues in the quarter. This, coupled with cross currency tailwind, will further boost revenue growth in the quarter. Further, IT companies are also seeing a demand tailwind in terms of cost takeout by clients (led by higher offshoring & automation), vendor consolidation opportunities, lift & shift deals and traction in small & medium deals, which could further propel demand in coming quarters. In terms of margins, we expect wage hikes to impact Q4FY21E margins except for Tata Consultancy Services (TCS) & Tech Mahindra. TCS had taken a wage hike in October. Hence, we expect the company to register healthy margin expansion in the quarter.

In midcap also margins to be impacted by wage hikes

In midcap companies, LTI & MindTree are expected to report 172 bps & 263 bps decline in margins led by wage hike, lower utilisation & reskilling, respectively. However, Tech Mahindra is expected to register 35 bps improvement in margins.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_IT_Q4FY21.pdf

Source : Equity Bulls

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