Comments
As Mr N.R. Narayana Murthy prepares to retire as Chairman of the company he built over the last three decades, he can walk into the sunset with the quiet satisfaction that his “middle child” as he referred to Infosys in his latest AGM will stay in the number two position for some more years.
In FY 2010-11, Infosys' revenues grew by 25.80 per cent and touched $6 billion and its closest competitor, Cognizant grew 40 per cent during 2010 to touch revenues of $4.6 billion. If both companies continue to grow at the same pace, there is a possibility that –mathematically at least – Cognizant will overtake Infosys in FY 2013–14 (see chart).
But Ms Srishti Anand, IT Analyst, Angel Broking, said that what is possible mathematically may not pan out in reality. “It will be difficult for Cognizant to sustain a CAGR of 40 per cent. They witnessed a surge because of discretionary spending and everybody is talking about discretionary spending getting stabilised,” she told Business Line .
Mr Sanjeev Hota, Associate Vice-President - Institutional Equities at Sharekhan, agreed with her. “Sustaining a 40 per cent CAGR is not possible over the next two years. Our projection for FY 2012-13 is that Infosys will grow at 23.9 per cent and touch $9.1 billion.”
However, at least one analyst felt that Cognizant has a chance to beat Infosys and touch the No. 2 slot. Mr Amneet Singh, Vice-President - Global Sourcing, Everest Group, said, “Right now, the difference between Infosys and Cognizant is $1.4 billion. Even if Cognizant grows at 36 per cent over the next eight quarters, they may make it. But it is difficult to predict for eight quarters.”
While the other analysts felt that Cognizant may not be able to sustain itself at a high growth rate for a longer period of time, Mr Singh countered, “Infosys grew at 30 per cent for many years before the recession.” But to beat Infosys, he said that Cognizant would have to diversify into other verticals and enter new geographies.
“Infosys wants to get more from transformational projects and consulting. If they succeed, they may be able to step up the momentum. Infosys has strategic plans and it will not easily concede the No. 2 spot to Cognizant.”
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.