A host of midcap and smallcap IT firms are expected to announce their March quarter results this month. Analysts expect a good quarter for tier I IT firms, but they largely prefer tier 1 IT companies now, given attractive valuations, increased traction in vendor consolidation and diversified client portfolios. Here’re their Q4 earnings projections for tier II IT firms.
Cyient Q4 results preview
IDBI Capital expects Cyient to report a 5.5 per cent QoQ rise in revenue in CC terms, with a cross currency benefit of 150 bps. Growth is expected to be led by 3.5 per cent QoQ (organic growth of 2.5 per cent) expansion in services revenues.
“DLM segment is expected to record 27 per cent QoQ growth. In terms of verticals, growth is expected to be led by Communication and Aerospace. We forecast Ebit margin to improve 60 bps QoQ to 13.5 per cent due to cost optimisation and price hikes,” the brokerage said.
Overall, it sees profit rising 5.2 per cent YoY to Rs 162.10 crore on a 46.7 per cent YoY rise in sales at Rs 1,733.30 crore. Dollar revenues are seen rising 7 per cent sequentially to $211 million. Ebit margin is seen at 13.48 per cent. IDBI Capital said investors would keenly follow outlook on verticals like Aerospace and
Communications, Transportation and ENU; outlook on DLM business; outlook on EBIT margin; outlook on attrition; and progress on acquisitions.
LTIMindtree Q4 results preview
ICICI Securities said LTIMindtree remains the fastest-growing IT services company under its coverage with a likely 10.4 per cent CC revenue growth in FY24 and 16.3 per cent/ 16.2 per cent growth during FY25E/FY26E. Merger synergies on both revenues and EBIT margins will likely enable an EBIT CAGR of 20 per cent over FY23E-FY26E, it said. For March quarter, it expects LTIMindtree to report 0.5 per cent CC QoQ revenue growth with adjusted EBIT margin expansion of 200 bps QoQ. It sees profit at Rs 1,156 rcore, up 4.1 per cent over Rs 1,110.60 crore YoY. Revenue is seen at Rs 8,742.40 crore, up 21.4 per cent YoY.
The brokerage has a revised 12-month target price of Rs 5,629 for the stock.
Coforge Q4 results preview
JM Financial expects Coforge to clock a 33.10 per cent YoY rise in net profit at Rs 276.50 crore compared with Rs 207.70 crore in the year-ago quarter. On the other hand, sales are seen rising 24.8 per cent YoY to Rs 2,175 crore from Rs 1,742.90 crore YoY. Dollar revenues are seen coming in at $264 million, up 4.3 per cent sequentially. Ebit margin, JM Financial said, may come in at 16.3 per cent against 15.2 per cent in December and 15.2 per cent in the year-ago quarter.
“We expect 3.5 per cent CC revenue growth for Coforge aided by Insurance business coming back, healthy growth in Travel. We expect adjusted Ebitda margins to improve 170 bps QoQ aided by reversal of furlough impact, cost optimisation in BPS business, higher bill days, deployment of trainees, normalised SGA and some benefit of currency. We expect large deal win ($20 million+) momentum to sustain,” the brokerage said.
Birlasoft Q4 results preview
As per IDBI Capital, Birlasoft’s revenue may degrow at 1 per cent sequentially in constant currency terms due to Invacare related issues, partially offset by cross currency tailwind of 30 bps. EBIT margins may taper down by 118 bps QoQ due to lower revenue growth led by client specific issues. All eyes would be on outlook on top clients; deal pipeline, large deal wins, new logo addition and client mining trend, outlook on EBIT margin and outlook on BFSI, manufacturing & hi-tech due to high inflation trend. The IT firm is seen reporting a 24.3 per cent YoY drop in profit at Rs 100.60 crore from Rs 132.90 crore YoY. Revenue is seen rising 10 per cent YoY to Rs 1,212 crore from Rs 1,101.40 crore YoY. Revenue may drop 0.7 per cent QoQ in dollar terms, the brokerage said. Ebit margin is seen at 10.07 per cent.
Mphasis Q4 results preview
Mphasis has been one of the worst performing stocks in Indian IT space, having corrected 24 per cent against a 12 per cent drop in NIFTY IT index since mid-February. This, ICICI Securities said, is due to its exposure to BFSI vertical at 62 per cent of overall revenues, where there is delay in decision-making and general pause on discretionary spending. ICICI Securities said the recent correction in the stock is overdone given MphasisтАЩ recent disclosure that its overall exposure to regional banks in US is in low single digits, and that it has a much higher exposure to larger banks which could be net beneficiaries of deposit movements from small regional banks. Also, MphasisтАЩ exposure to the mortgage business will probably bottom out in Q4FY23 with more vulnerable parts like refinancing already at very low levels, ICICI Securities said. The brokerage sees revenue for the IT firm rising 8.9 per cent YoY to Rs 3,532 crore. Profit is seen rising .3 per cent YoY to Rs 420.80 crore. Ebit margin may come in at 15.9 per cent in March quarter against 16 per cent in December and 14.3 per cent in the year-ago quarter. Revenue may degrow in CC terms at 0.9 per cent.
Persistent Systems Q4 results preview
Motilal Oswal Securities expects Persistent Systems to report a profit of Rs 276.30 crore compared with Rs 201 crore in the year-ago quarter, up 36 per cent. Revenue is seen rising 37.2 per cent YoY to Rs 2,248 crore Rs 1,638 crore in the same quarter last year. Ebit margin is seen at 15.5 per cent against 14 per cent YoY.
“We expect growth at 3 per cent QoQ CC below the 4-6 epr cent expected range due to weak demand environment. Margin should largely remain flat QoQ after good expansion in Q3FY23. The medium-term growth and margin outlook should be the key monitorables,” the brokerage said.
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