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Prabhudas Lilladher Report
We estimate healthy revenue growth of 2.7-4.5% QoQ constant currency (average: 3.4%) for tier-I and 2.5-5.8% QoQ CC (average: 3.7%) for tier-II.
However, U.S. dollar revenue growth will be lower due to cross currency headwinds of 100-200 basis points QoQ. We anticipate margins to decline by 100-200 bps QoQ led by wage increments, higher retention costs, increased travel costs and drop in utilisation levels.
We expect healthy deal wins in Q1. Further management may reiterate strength in near term demand. Commentary on health of consumer facing verticals and reprioritisation of client spends would be key points to monitor.
We shift from discounted cash flow based valuation to price-to-earnings multiple based relative valuation and tune our target multiples factoring risk of slowdown in technology spends, given worsening global macro.
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