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MOSL: TECHNOLOGY 2QFY22 PREVIEW: Strong 2Q growth momentum despite supply challenges

TECHNOLOGY 2QFY22 PREVIEW:TECHNOLOGY 2QFY22 PREVIEW:
Demand strong, growth outlook to remain intact- We expect a median growth of 5.4% CC QoQ in 2QFY22 in our IT Services coverage universe. Topline performance is expected to remain strong across our coverage, led by a robust demand environment and deal wins. Tier II IT should continue to outpace Tier I IT in terms of growth.- Tier I companies should deliver revenue growth between 3.9% and 6.9% QoQ CC, while Tier II companies will have a wider growth band (4.9-10.5% QoQ CC). - Management commentary in FY22 will remain strong, with better than usual seasonality in 3Q, which can aid the full year outlook. We expect INFO to again raise its FY22 revenue growth guidance, while HCLT should see an improvement in its growth trajectory to low teens. Commentary on medium term growth will be a key monitorable. - Recent earnings from industry peer ACN indicate a strong and sustainable demand environment, with continued spend on Digital and Cloud adoption. 
INFO to lead organic revenue growth within Tier I, MTCL in midcap- INFO should lead revenue growth in Tier I IT (+5.7% QoQ CC) on an organic basis, while WPRO should deliver 6.9% QoQ reported growth. This will be followed by TCS (+4.2% QoQ CC), TECHM (+4.2% QoQ CC), and HCLT (3.9% QoQ CC). - Among Tier II IT, we expect upbeat revenue traction across our coverage universe, with MTCL leading the pack with 8.5% QoQ CC growth, aided by deal ramp ups and broad based growth. PSYS and MPHL (Direct business) should also deliver strong performance in 2QFY22, with a growth above 6% QoQ.