Q2 IT sector preview: PAT to remain muted; expect re-rating in near term

The impact of slow growth led by global headwinds is largely factored in the prices and investors are gradually changing their view

The information technology (IT) sector is now showing early signs of reduction in the extent of earnings downgrades. The sector went through a slew of downgrades led by muted revenues and profitability guidance due to a slowdown in the business model.

Though the IT industry is likely to remain muted for the entire financial year 2018 (FY18), earnings are expected to grow by 11 per cent year-on-year (YoY) in FY19. Outlining the industry’s annual guidance in June this year, Nasscom had said that the Indian IT exports would grow by 7-8 per cent in FY18, same as the previous fiscal year,