IT services Q4 results preview, IDBI Capital

Worsening macro conditions and recent banking crisis in U.S. and Europe indicate slowing down of tech spends by enterprises globally. We believe enterprises will shift their focus on cutting cost resulting in higher cost take out deals, vendor consolidation and lower discretionary spend.

Banking financial services and insurance, telecom, retail and hi tech verticals are expected to be the impacted by the slowdown, thus weakening H1 FY24E growth outlook. We expect even those verticals not impacted will have cautious outlook.

For Q4 FY23E, we expect large caps to register dollar growth of -1% – +1% QoQ in constant currency terms aided by 15-100 basis points cross currency tailwind.

Among mid-caps we expect revenue growth of -1%-3.5% QoQ (organic) in CC aided by 30-150 bps cross currency. Further, tier-I margins are expected to record QoQ growth in the range of -99 – +90 bps. Bloomberg