TCS has once again delivered substantially better growth compared with Infosys across financials as well as key operating parameters in the June quarter.

Growth across most key segments and geographies, continuing traction in adding large-size clients and healthy expansion in volumes and utilisation were the positives for the company during the period.

During the quarter, revenues grew 5.5 per cent sequentially in dollar terms, more than twice the 2 per cent growth that Infosys managed. Net profits fell for TCS as with its peer on account of the wage hikes given out during the quarter.

TCS delivered volumes (person months billed) of 5.7 per cent, while Infosys managed only half that number at 2.9 per cent. Pricing had largely remained stable for both the players.

Broad-based growth

For TCS, all verticals except the BFSI segment such as telecom, retail and manufacturing, grew at a pace faster than the overall company’s revenue rate. Its application, testing and infrastructure services witnessed significant traction. But as with Infosys, discretionary spends were not that forthcoming from clients in the high-margin offerings.

TCS added five in the $50-million bucket, which trumps the solitary addition in the category by Infosys. In the $20-million category too, TCS managed to add another 8 customers.

North America led the growth for both the companies, though TCS managed to derive significant traction in Europe as well.

Clearly, TCS has been able to tap into all client segments, making for broad-based growth. Utilisation, at 85.3 per cent is among the highest in the industry for TCS, a clear 5 percentage points ahead of Infosys during the quarter.

Leading the way

Clearly, TCS is well placed to grow at much faster than the estimated rate for the industry of 13-14 per cent.

Infosys has guided for a 7-9 per cent revenue growth in dollar terms for FY15. TCS looks set to deliver twice that rate of growth in its revenues, that too on a much higher base. Attrition levels are lower for TCS at just 12 per cent, whereas for Infosys it is 19.5 per cent.

Right now, TCS enjoys a 40 per cent higher valuation premium over Infosys.

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