Q4 results: IT firms' revenue to get cross-currency boost, FY19 outlook key

Aided by currency movements, operational efficiency and automation, IT companies are expected to report improvements in EBIT margins in the January-March quarter of FY18

We expect IT firms under our coverage universe to post a combined 3.1% QoQ rise in USD revenue in 4QFY18. We expect the Top-5 IT firms to post 1.9-3.5% QoQ USD revenue growth in reported terms, with Tech Mahindra to lead. Mid-sized firms will see variation, with Cyient and Mindtree likely lead (8.2%/4.1% QoQ USD revenue growth, respectively). Cross-currency movements were positive in 4QFY18, with the USD depreciating against all major currencies including the EUR (4.1% QoQ depreciation on the quarterly average rate), GBP (4.5% QoQ) and the AUD (2.4% QoQ). The INR saw slight appreciation of 0.6% QoQ vs