IT Sector Preview: Cross currency to affect reported dollar revenue

Key things to monitor for the street from the Q1 results is likely to be the share of digital

The IT firms under our coverage universe are expected to post a combined 0.8% quarter-on-quarter (QoQ) rise in dollar revenue in the first quarter of financial year 2018-19 (Q1 FY19). Reported dollar revenue is likely to be adversely affected owing to the strengthening Dollar against major cross-currencies including euro, pound and Australian Dollar (2-4% QoQ). We expect 40-120 bps adverse impact of cross-currencies in Q1 FY19. The top-5 IT firms are likely to post -2% to +2% QoQ dollar revenue growth, with TCS likely to lead the pack. Mid-sized firms will see variation, with Hexaware Technologies and Persistent Systems (3.7%