Analysts see robust demand, margin squeeze for IT firms; prefer large-caps

Despite being a seasonally weak quarter due to furloghs and lower billing days on account of holidays, most companies in the information technology (IT) sector reported a strong set of numbers for the October – December 2018 period of financial year 2018-19 (Q3FY19). Analysts attribute the performance to favourable demand environment, execution of early deal wins and currency tailwinds.

Data wise, top five Tier-1 IT companies reported revenue growth in the range of 1.8-5.6 per cent on sequential basis and 7-13 per cent year-on-year (y-o-y) on constant currency (CC) basis. And this is reflected in their stock performance as well.