Bleak Q1 earnings likely for IT cos

New Delhi IT companies are expected to report softer revenue growth in Q1, owing to weaker discretionary spending, delay in decision-making leading to project deferrals and slower ramp-ups, and pockets of weakness – mortgage, retail, hi-tech, telecos, and increased caution by clients amid macro uncertainties, Emkay Global Financial Services said in a report.

Sequential EBITM performance will largely reflect the wage hike cycle, while moderation in attrition, pyramid rationalization, operating efficiencies, freshers getting billed and favorable cross-currency would support improvement in underlying margin performance, largely negating operating leverage hit from muted growth.

Deal activities, particularly in cost takeout and consolidation, have seen some uptick in last few weeks, although company-specific so far, augurs well for growth recovery.