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TCS has continued its habit of beating market expectations with respect to its results.
Once again the company has done better than Infosys across parameters such as volumes, utilisation and delivered broad-based growth across key segments as well as geographies in the June quarter.
Expansion in all its top verticals of operation – BFSI, Retail, Telecom etc., and steady traction across North America, the UK and Europe were key highlights for TCS during the quarter. In terms of bagging large-size contracts alone, Infosys managed to better than the company.
Revenues grew by 4.1 per cent sequentially for the company in dollar terms, while net profits rose marginally by 0.7 per cent despite being faced with wage hikes and higher tax outflows. For Infosys, the figures were 2.7 per cent growth in revenues and a fall of 5.9 per cent in profits. In terms of volumes (person months billed) too, TCS scored with a strong 6.1 per cent growth, while Infosys managed a reasonable 4.1 per cent.
With utilisation rates of over 82 per cent, clearly TCS seems to have much higher clarity on the revenue flows than Infosys, aided by the fact that it also depends less on discretionary spends when compared to the latter.
TCS managed to win two clients in the $100 category, while Infosys managed three.
In the $50 million plus bucket, TCS managed just one customer addition, while Infosys bagged seven clients. But in terms of growth across verticals, TCS clearly scored, with segments such as BFSI, Retail, Telecom and Manufacturing expanding at or faster than the company’s overall revenue rate, with some of them managing even double digit increase.
For Infosys, the growth was more narrowly led by just Retail and Manufacturing. Again for TCS, North America, the UK and Europe grew at a healthy pace, whereas for Infosys there was a fall in revenues from Europe.
TCS has thus delivered a strong set of numbers gaining from what is generally a seasonally strong quarter for IT players.
The sheer consistency in its performance over the past few years has meant that investors are willing to pay it a huge valuation premium ahead of other top-tier players.
For the foreseeable future, clearly, it is likely to continue to demand that premium gap ahead of peers.
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