IT Services Q4 Earnings Preview

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Our IT services coverage universe should witness good median revenue growth in Q4 FY22E (up 3.7% constant currency QoQ and 25.4% YoY), while Ebit / profit after tax growth of 2.3% / 3.1% QoQ will be relatively muted due to an unseasonal dip in margin on continued supply pressures.

Revenue commentary should remain strong in Q4 FY22E, with no impact from the Russia-Ukraine war and inflation on demand.

While tier-II players would continue to outgrow tier-I companies, the gap should start shrinking in Q4 FY22. Revenue growth is expected to moderate QoQ in 4 QFY22 as a high base effect comes into play.

We expect the demand outlook to remain strong in FY23, although the initial guidance may bake in a potential impact on demand from elevated inflation in the US and Europe.

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