Emkay Global Financial Services stated in a report that an examination of the most recent quarterly results of 24 international companies shows no appreciable improvement in the demand environment due to the persistence of macroeconomic uncertainties.
The general discussion mostly stays consistent with Indian IT companies. Weak discretionary spending, delayed decision-making, and revenue conversion in an unpredictable macroenvironment are causing revenue softness for IT services companies this quarter as well, with an unclear timetable for recovery.
Even though a few companies did point out the beginning of improvement in a few areas, the short-term environment is still soft overall. According to the report, this suggests that a scenario of muted growth is likely to continue in the near future.
Businesses anticipate a recovery during CY24, which means that H2 will probably outperform H1. Because of the probable postponement of US rate cuts and the expectation that demand will rebound in H2CY24, Nifty IT has underperformed the overall markets by a small margin over the past month.
The report stated, “We believe mid-cap valuations are rich, while large-cap valuations are relatively less demanding.”
Over the past few quarters, commentary on demand from international IT companies has mostly stayed consistent and has been in line with that of Indian companies. According to the report, Accenture, Capgemini, and Cognizant’s guidance for the upcoming year also indicates weakness in the near term.
The majority of businesses have stated that as the macroenvironmental uncertainty decreases throughout the year, growth will progressively improve. The report stated, “We are building in high single-digit growth estimates for FY25, but a slower-than-expected recovery could pose a risk to those estimates.”
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