INSUBCONTINENT EXCLUSIVE:
MUMBAI : Fourth-quarter results from the top two Indian IT companies have produced contrasting investor responses
Tata Consultancy Services (TCS) surged the day after the company said it was back on course to double-digit growth and high margins
Infosys slumped the next trading day after forecasting lower margins, disappointing the street with its below-industry-growth guidance.
TCS
posted its biggest singleday gain since April 2012 on Friday, closing at Rs 3,412 on the Bombay Stock Exchange, up 7 per cent, for a market
cap of $98.9 billion after hitting an intraday record of Rs 3,421.25
Infosys, which reported earnings on April 13, fell 3 per cent on April 16
The stock has since risen, getting a lift as the broader IT sector has been boosted by a weak rupee.
Analysts said the fortunes of the two
on the back of healthy deal wins and deal closures in recent past, strong deal pipelines, traction for its digital offerings and
the company following the results and expects revenue growth to accelerate
USD revenue growth for FY19E (vs 9.5 per cent growth modelled earlier)
per cent discount three months ago, he said, adding the upward revenue trajectory was encouraging.
Analysts mostly had the opposite take on
lower end will fall below the industry growth rate expectation of 7-9 per cent issued by the National Association of Software and Services
TCS does not give growth forecasts, but the company has closed well over $6 billion of deals in FY18, which will boost its growth
Infosys closed over $3 billion of deals in the year.
One quarter into his tenure, Infosys CEO Salil Parekh seems to have had a hard landing
Predecessor Vishal Sikka had tried to wrest back the IT bellwether tag from its larger rival but was unable to do so
Infosys is now expected to lag in revenue growth and profitability for the next few years unless Parekh can pull off a turnaround, analysts
said.
Infosys said it would give up some of its margins to invest for growth, while TCS CEO Rajesh Gopinathan said that higher future growth
would boost margins.
To this end, Infosys reduced its margin target to 22-24 per cent from 23-25 per cent
But we think we are on the right trajectory for higher growth, and we are gaining traction in digital
heard Parekh, he talked about investing to stay relevant to clients, about how large clients are not necessarily working with Infosys on
