Shares of information technology (IT) companies fell as much as 6 percent in intraday trading on the National Stock Exchange (NSE) on Monday after US Federal Reserve Chairman Jerome Powell said higher inflation could hurt families and businesses.
At 9:23 am, the Nifty IT index was the top loser among the sectoral indices, down 4.5 percent, compared to a 2 percent decline in the Nifty 50. percent compared to a 4 percent decline in the Nifty 50 index.
Shares of Tech Mahindra, Infosys, Tata Consultancy Services (TCS), Mindtree, Larsen & Toubro Infotech, Coforge, HCL Technologies, Wipro and L&T Technology Services fell as much as 6 percent during the day.
The April-June quarter (Q1FY23) saw the performance of IT companies as it was the first full quarter of performance (company-specific seasonality) after the impact of full/partial furloughs in Q3 and Q4. Operating margins, however, were impacted by wage increases extended to some companies during the quarter, while supply disruptions, increased subcontractor costs, and travel and visa-related costs acted as headwinds for others.
Despite some pain in selected verticals of IT companies, analysts at ICICI Securities remain optimistic that there will be no downward revision to FY23 revenue growth guidance.
“The demand environment remains strong, reflecting healthy book growth. However, companies have cited weakness in a few pockets as some macro headwinds have impacted technology spending. The weakness is mostly related to BFSI and BFSI. Retail Positions: Revenue Growth Guide in FY23 It is very encouraging that no company saw a downward revision,” the brokerage said.
On the contrary, media report by Economic Times Revenues for IT service providers could reach as much as 33 percent as the growth rate of three platforms – Amazon Web Services, Microsoft Azure, and Google Cloud. In the first half of 2022, the three platforms saw a 7 percent decline in incremental revenues. Click here for the full report
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