Revenue growth momentum for IT to continue in a seasonally soft quarter: Emkay Global

On the back of a broad-based secular demand environment, a healthy revenue growth momentum for large tech firms in the country is likely to continue in the third quarter of FY22, said Emkay Global Financial Services.

Tier-1 tech players are expected to post dollar revenue growth of 1.9- 3.3% QoQ (2.7-4.0% CC) while Tier-2 IT firms are likely to grow in the range of 1.1-10.5% CC QoQ, as per Emkay Global.

The firm expects Infosys to revise its FY22 revenue growth guidance to 17.5-18.0% in constant currency term YoY from the current 16.5-17.5%. HCL Tech is likely to retain its double-digit revenue growth guidance for FY22 and Wipro is expected to guide for 2-4% in constant currency QoQ revenue growth for Q4FY22.

While the December quarter was a seasonally soft one (due to furloughs and lower working days), tech firms would report steady sequential revenue growth on the back of secular broad-based demand trends, healthy deal wins and active M&A activities, it said.

“The demand environment continues to remain broad-based, driven by strong demand for digital, cloud, data analytics, 5G, IoT, Cybersecurity and AI,” the firm said in its revenue outlook.”

For Tier-1s, Emkay Global expects dollar revenue growth of 1.9-3.3% QoQ (2.7-4.0% CC) for Tier-1 companies.

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