Indian IT sector may post weak earnings for the Oct-Dec quarter, warns brokerage

Expectations of tier-I firms can dip to 7 per cent, triggering a contraction in price-to-earnings multiple.

FPJ Web DeskUpdated: Tuesday, January 03, 2023, 09:59 PM IST
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The global tech industry has been facing headwinds leading to layoffs that have so far affected more than two lakh employees, as even giants such as Cisco, Google and Microsoft aren't immune to the downturn. Although the Indian tech sector has remained resilient, they rely a lot on demand from the US and Europe, both of which are facing a double whammy from inflation and recession. This is why brokerage firm investec has warned of negative surprises in the results of the October to December quarter for Indian IT firms in FY23.

Citing higher furloughs and stress for existing business books as deciding factors for the weakness during the quarter, the brokerage added that investors could find respite in positive margins. Expectations of tier-I firms can dip to 7 per cent, triggering a contraction in price-to-earnings multiple.

Among major players Infosys as well as rival HCL will fail to hit the top-end of revenue growth expectations. at the same time tier-II companies are likely top witness a sharper revenue decline.

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