Engineering R&D segment to outperform IT services players in FY23

Barring Cyient, valuations of most ER&D firms on the expensive side

A mixed January-March quarter (fourth quarter, or Q4) results of companies in engineering, research and development (ER&D) segment notwithstanding - at the heels of macro risks - the Street expects major players in the segment to maintain their growth outperformance, in comparison to their information technology (IT) peers in 2022-23 (FY23). Historically, the segment has been growing at a fast clip (400 basis points), as opposed to generic software services majors.   

Says Amit Chandra, associate vice-president, HDFC Securities, “The ER&D segment is expected to outperform IT services players (in line with historic trends), taking into consideration the size of