Q4FY21 Preview: Revenue Growth To Remain Strong For IT Companies

The revenue growth for IT Companies will remain strong, Emkay Global has stated in its latest preview for Q4 FY 2021.

"We expect Tier-I techs to report qoq growth of 2.2-3.9% in Q4FY21 and 2.5-4.5% for Tier-II techs in CC terms, maintaining strong revenue growth momentum from Q3FY21. Cloud, digital transformation, automation, AI and cybersecurity continue to see healthy demand.

Barring Coforge and Firstsource, all other companies are expected to report EBITM decline on a sequential basis due to salary hikes, promotions, bonuses and stronger rupee, partly negated by offshoring, revenue momentum and continued WFH savings, Emkay Global has stated in its report.

"Deal wins remain healthy across the companies. We expect Infosys and HCLT to guide for 12-15% and 11-13% YoY CC revenue growth and 22-24% and 20-21% EBITM for FY22, respectively. Wipro is expected to give 1-3% revenue growth guidance for Q1FY22.

We tweaked our earnings estimates after factoring in revised currency assumptions. We prefer Tier-I stocks over Tier-II stocks on a relative basis. In Tier-I stocks, our pecking order is Infosys, HCL Tech, Tech Mahindra (all rated Buy). TCS and WIPRO are (both Hold). In Tier-II stocks, we prefer PSYS and FSOL (all rated Buy)," the Emkay Global report states.