TCS vs Infosys Post Q1

Here are how the two IT majors compared on top four parameters: 

Revenue & profit: 

TCS: TCS Q1 revenue rose 3.7 per cent to $4.36 billion, meeting analysts' estimates. Net profit declined 0.4 per cent QoQ to Rs 6,317 crore, less than expected as it managed to mitigate margin contraction. 




Infosys: Infosys' Q1 revenue rose 2.2 per cent QoQ to $2501 million for the quarter ended June 30 from $2446 million reported for a typically strong June quarter. In rupee terms, net profit rose 13.4 per cent to Rs 3,436 crore. 

Brexit 

Infosys: With a major part of its business coming from Europe, Brexit is an important factor that will continue to weigh on both the companies in the forthcoming quarters. For TCS, over 27 per cent of its revenue comes from Europe, and 16 per cent from the UK. 
For Infosys, the percentage of revenue coming from Europe is 23 per cent. 

"TCS' growth numbers were broadly in line with estimates, Infosys' constant currency revenue growth at 1.7 per cent was sharply lower then estimate," Rikesh Parikh, VP- Markets Strategy & Equities, Motilal OswalBSE 1.82 % Securities, said in a note. 

"Managements of both the companies acknowledged that Brexit and Visa issues would be potential headwinds. However, it will get clear only over the next 2-3 quarters," he added. 

Client additions 

TCS added six new clients who contributed more than $20 million in revenue and four more clients contributed more than $50 million. It added no new customers to the $100 million band for the first time in seven quarters. 

Infosys added three clients to the $100 million-plus category taking the total count to 17. During the quarter, Infosys made an investment in Trifacta, a leading provider of data-wrangling software that enables non-technical users to easily transform data for analysis. 

Analyst commentaries 

TCS: Most global brokerage such as CLSA, Deutsche Bank and Credit Suisse maintained a positive stance on TCS post Q1 results and set their 12-month target price at Rs 3,000. 

Infosys: Infosys put out a quarterly report card that fell well below market expectations. However, analysts are still not giving up on the stock. 

"We expect Infosys to continue to grow ahead of the industry in FY17, and increasing levels of automation are likely to continue to drive utilisation higher, providing a margin lever," Reliance Securities said in a report. 

"Post this steep decline, the Infosys stock trades at less than 15 times FY18E EPS, which we believe ignores the likely positives and potential revenue uptick going forward. We currently have a buy rating on the stock," it said. 

Source: Economic Times

By Kshitij Anand