high - IT services spending is highly discretionary and procyclical. Financial services clients (majority of revenue) cut consulting budgets aggressively in downturns, prioritizing cost reduction over digital transformation. The 84.5% stock decline reflects investor anticipation of recession-driven budget cuts. Historical patterns show 15-25% revenue declines for offshore IT providers during recessions (2008-2009, 2020). Current 4.3% revenue growth with margin compression suggests demand is already weakening materially.

Rising interest rates negatively impact Endava through two channels: (1) Financial services clients face margin pressure and reduce technology spending budgets, particularly for discretionary digital transformation projects. (2) Higher discount rates compress valuation multiples for growth stocks - Endava's forward P/E likely traded at 25-30x during zero-rate environment but now faces 8-12x multiples. The company carries modest debt (0.43 D/E ratio), so direct financing cost impact is limited. However, clients in fintech/payments sectors face higher capital costs, reducing their appetite for large IT projects.

value - The stock trades at distressed multiples (0.3x sales, 0.4x book, 6.4x EV/EBITDA) attracting deep-value investors betting on cyclical recovery and margin normalization. The 84.5% decline has eliminated growth investors. Current holders likely include contrarian funds seeking 3-5x upside if the company can return to 8-10% operating margins and 10-15% revenue growth. The 16.6% FCF yield suggests potential for capital return or debt paydown if cash generation stabilizes. High volatility and small market cap limit institutional ownership.