Better Days Ahead

The tech sector has been a consistent performer for some time now and did not fail the market's expectations from it. Revenue growth from the US - the largest revenue source for Indian IT sector - came in higher than the previous two quarters. Revenue growth from the rest of the world (excluding Europe), saw better than expected 10 per cent (y-o-y) growth - the second consecutive quarter of such growth. Tier-1 tech companies reported a revenue growth of 4 per cent (q-o-q). An improved economic outlook in the US has positively impacted demand. The only geography that saw weakness was the euro that pulled down growth. Key companies that struggled with growth in Europe were TCS and HCL Tech. Verticals reported to be doing particularly well include manufacturing, and energy and utilities that saw robust growth of eight per cent and seven per cent (q-o-q) respectively, for tier 1 companies. On aggregate, the industry reported revenue growth of close to 16 per cent (y-o-y). Operating profit grew by 11 per cent. Aggregate EBITDA margins declined from 24.4 per cent to 21 per cent