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Anand Rathi Report
We expect companies to largely maintain their total contract values, but report slower growth in Q3 for various reasons such as more furloughs or client-specific challenges.
The sector is likely to report aggregate ~2% QoQ dollar growth and 8% YoY on $ basis (~13% constant currency). Sequentially, dollar growth has returned to pre-pandemic levels.
Margins are likely to inch up sequentially on many tailwinds (lower cross-currency headwinds, easing attrition pressure and rupee depreciation). More benefits are likely to follow in Q4.
Mid-size IT companies continue to grow faster over longer periods. However, Q3 may see a few of them navigating specific challenges, leading to a narrowing of the growth gap with larger peers.
Client quality is critical in economic slowdowns to avoid sudden ramp-downs. Expect growth divergence ahead.
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More Research Reports On Indian IT Services Q3 FY23 Earnings Preview
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