Result season for Q1FY22 begins: Heres what you can expect from IT sector

According to the industry experts, the growth outlook for FY22 in terms of revenue is likely to be in strong double-digits for the IT majors.  

The good news for the IT stock investors is that the strong deal win momentum of FY21 is expected to continue this fiscal. The pandemic has resulted in increased cloud adaption, which is expected to keep the sector’s deal pipeline robust.  

The revenue growth would be aided by the ramp-up of large deals won in the recent quarters, increased traction in digital services along with the ongoing recovery in segments such as travel, hospitality & manufacturing. Moreover, Tier-1 IT firms are estimated to see sequential organic revenue growth of 2-4 per cent while the growth is expected to be in the range of 3.5-7 per cent for tier-2 firms on a constant currency basis.  

While the robust growth is expected to be translated in revenue upgradation, the IT firms might face some pressures on the EBIT margins due to a rise in attrition, a decline in utilisation rates, and salary hikes, which is seen as a threat to their operating performances in Q1FY22. Majority of the IT giants have undergone regular increments in Q1FY22.   

The IT services sector was one of the key beneficiaries of the pandemic. Nifty IT index saw a massive rally of 102 per cent in FY21, comfortably outperforming Nifty 50 index, which gained around 70 per cent in the same timeframe.  

According to the industry experts, the growth outlook for FY22 in terms of revenue is likely to be in strong double-digits for the IT majors.   

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