IT companies bracing up for muted Q3 earnings on lower deal wins and near-term challenges

The third quarter earnings season will kick start with the IT earnings next week. Given the near-term headwinds, delays in discretionary and dollar-rupee movement, what’s the market expectation? Most analysts believe that margins are set to improve and utilisations may move up but growth may stay muted.

Kotak Institutional Equities believes that the deal trajectory in Q3FY24 of the key IT companies reveals a surprising dip in wins from North America compared to the earlier quarters. In addition, no mega deals have been announced compared to six in the previous quarter. “While we acknowledge that publicly announced deal wins only account for a small fraction of overall deal wins, modest announcements,