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■ We expect a modest 1-2% qoq revenue growth in constant currency (CC) terms for Tier I companies in a seasonally weak quarter, with no major cross-currency impact. HCL Tech will lead qoq revenue growth.
■ Mid-Tier players are expected to report relatively better growth (1.5-3.7% qoq), but Hexaware would be affected by client ramp-downs. Persistent is expected to deliver strong qoq revenue growth, supported by seasonal strength in the IBM business.
■ While we expect the operational efficiencies to limit the impact of seasonal weakness on operating margins, we highlight that all (11) IT Services companies under our coverage would report lower EBIT margins on yoy basis.
■ Key monitorables across results/commentary - (1) Early indications on CY18 client spending trends (especially in Financial Services in North America), (2) Infosys new CEO's first address and roadmap both, on strategy as well as outlook (expect Infosys to retain guidance) and (3) Commentary on Digital engagements. We prefer TCS and Mphasis in our coverage universe.
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