Strong demand seen for IT services in 3QFY22 despite seasonal factors: MOSFL
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Strong demand is seen for IT services in the third quarter of FY22, said Motilal Oswal Financial Services (MOFSL).
The brokerage house said that it expects a strong median revenue growth during the period under review.
The PAT (profit after tax) growth is expected to come in at 6.2 per cent in 3QFY22 for the brokerage house's 'IT Services' coverage universe.
The strong demand environment is expected to continue in 3QFY22, with tier II players again outgrowing tier I companies within our coverage universe,".
Besides, the report said that despite adverse seasonality, tier I companies should deliver revenue growth in the 3.2 to 4.8 per cent 'QoQ' range, while tier II players will have a wider band of 3.6 to 7.1 per cent.
"We expect a strong initial outlook for FY23E, with companies maintaining their view of multi-year growth tailwinds on the back of Cloud migration. Guidance for 4QFY22 is also expected to be positive on the back of continuing deal wins," the report said.
"Strong growth in 3Q should again result in ‘INFO' (Infosys) increasing its FY22 revenue growth guidance. We also expect HCLT to deliver a strong 3QFY22, partially benefitting from favourable seasonality in its Products business," it added.
The report pointed out the key monitorable in the 3QFY22 commentary will continue to be the medium to long term growth visibility, attrition, and pyramid impact of fresher onboarding.
"A strong November quarter earnings and commentary from ‘ACN' (Accenture) has led to the focus shifting to a potential growth upside in FY23 and a moderation in attrition," it said.
