PremiumBENGALURU: Acceleration in digital technologies and improved deal pipeline is expected to drive IT companies’ revenues in the first quarter ended June, according to an ICICI Securities report.
Key verticals like banking, financial services & insurance (BFSI), retail, manufacturing, hi-tech, and life science will drive revenues in the June quarter that is seasonally strong for the sector. A discount reversal is expected in companies having exposure to travel verticals, the report said.
IT companies have not seen any impact of the second wave of covid-19 on their topline. The brokerage firm, however, expects a marginal positive impact from cross currency.
“IT companies are also seeing a demand tailwind in terms of cost takeout by clients (led by higher offshoring and automation), vendor consolidation opportunities, and traction in small and medium deals, which could further propel demand in coming quarters," the report said.
In terms of margins, factors like wage hikes, higher attrition, visa costs, and increased travel costs are expected to act as a margin headwind, the report said.
Some of the key factors to watch out for in the June quarter are improvement in a deal pipeline, upgrades in double-digit guidance, hiring and attrition trends, margin outlook, and revival in developed markets post-vaccination.
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