Gains from rising demand, WFH
▶ IT Services companies such as Tata Consultancy Services (TCS), Infosys and Wipro had another good quarter of revenue and earnings growth, thanks to the tailwind created by the pandemic
▶ Companies gained from a surge in demand for IT services and decline in overhead expenses as most employees continue to work from home (WFH)
▶ Second tier and mid-cap IT companies reported faster revenue and earnings growth while the industry leader TCS was a laggard
▶ Going forward, analysts expect the industry to face margin pressure due to wage inflation that may test companies’ ability to sustain the earnings growth
▶ The sector’s price-earnings multiple is at an all-time high, which could limit the upside for investors even if earnings growth remains favourable