IT companies' growth momentum likely to continue through FY22: Emkay Research | Mint
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Business News/ Industry / Infotech/  IT companies' growth momentum likely to continue through FY22: Emkay Research
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IT companies' growth momentum likely to continue through FY22: Emkay Research

Margins are, however, likely to remain under pressure in FY22 due to wage hikes, normalization of travel and other costs, increased hiring costs, and expenses related to retaining talent 

Tier-1 firms posted 0.9-12.2% sequential growth, while tier-II services companies reported 0.7-15.6% growth in Q1. Photo: MintPremium
Tier-1 firms posted 0.9-12.2% sequential growth, while tier-II services companies reported 0.7-15.6% growth in Q1. Photo: Mint

Bengaluru: The revenue growth momentum of tier-I and tier-II information technology (IT) companies, seen in Q1FY22, is expected to sustain in the coming quarters, Emkay Research has said in a note.

The growth momentum was driven by a consistent surge in demand for emerging technologies such as cloud, data analytics, digital transformation, cybersecurity and artificial intelligence (AI), said the note dated 27 August.

Tier-1 firms posted 0.9-12.2% sequential growth, while tier-II services companies reported 0.7-15.6% growth in Q1. “We expect the revenue momentum seen in Q1 to continue throughout FY22, led by secular broad-based demand trends and an anticipated recovery in the travel, tourism and hospitality verticals," the report said.

Infosys Ltd raised its revenue growth guidance for FY22 to 14-16% in constant currency from the earlier guidance of 12-14%, while HCL Technologies Ltd retained its double-digit growth guidance for FY22. Wipro Ltd guided for a 5-7% sequential growth in Q2FY22 and remained confident of delivering double-digit organic revenue growth this fiscal.

“The overall commentary suggests that FY22 is expected to be a solid year in terms of revenue growth. The shortage of skilled resources remains a key challenge in the short term," the brokerage firm said.

Margins are, however, likely to remain under pressure in FY22 due to wage hikes, normalization of travel and other costs, increased hiring costs, and expenses related to retaining talent amid pent-up demand.

 

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Published: 27 Aug 2021, 03:23 PM IST
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