Showing posts with label TCS. Show all posts
Showing posts with label TCS. Show all posts

Saturday, April 27, 2013

Revisiting IT - beyond the street

Results of top Indian IT companies, with the exception of TCS, have sent shock waves across markets. But rather than worry about them, Indian IT companies must focus on structural reforms for long term advantage

There is a paradoxical advantage that Indian IT firms enjoy in the current situation due to their reliance on overseas (especially developed) markets rather than the domestic economy. They have been through one major crisis in 2008, when most of the domestic demand-dependent India Inc. was rejoicing in our economy’s prized ‘fundamentals’. This time, when the crisis shifts to the EU, one can expect that they are better prepared.

Did they manage to take advantage of precedent? Or have they wasted a good crisis, as the saying goes? Let us first look into the final results of the three IT companies that are a part of the B&E Power 100. TCS, of course, is a clear winner with revenues of $10.17 billion (growth of 24% yoy) and net profits of $2.2 billion (growth of 16% yoy); which places it at 4 in the B&E Power 100 list compared to 7 last year. Infosys reported slower growth with revenues at $6.99 billion (a growth of 15.77% % yoy) and profits at $1.72 billion (a growth of 12.64% yoy; ranked 6 in the B&E Power 100 compared to 11 last year). Wipro’s results were even more modest, as it posted revenues of $5.92 billion (a growth of 13.4% yoy) and net profit of $1.1 billion (a growth of 5% yoy, rank dropped to 18 in the B&E Power 100 from 17 last year).

The real investor challenge these players face is the burden of expectations. Infosys, in particular, is facing the brunt, since its Q4 results showed revenues of $1.77 billion (yoy growth of 10.5%) and a decline of 2% qoq. Furthermore, it gave a very modest guidance of 8-10% revenue growth for the current fiscal, which would underperform


Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri
For More IIPM Info, Visit below mentioned IIPM articles
 
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Tuesday, February 5, 2013

INDIA INC.: Q3 PERFORMANCE

A 34% rise in India Inc.’s Q3 profit may bring smiles to many, but it’s nothing more than a statistical jugglery of an ultra-low base founded in the third quarter of FY2009. Though things have started looking better, India Inc. still has miles to before they can really celebrate by Deepak Ranjan Patra

More than a real performance, the truth behind the superb bottom-line showdown in the third quarter is the statistical jugglery of base-effect. Low-base in the third quarter of the last fiscal, which was also the worst quarter during the current slowdown due to the turmoil in the financial industry caused by the sub-prime crisis and followed by collapse of giants like Lehman Brothers, is the particular reason that made India Inc. look bigger and better in Q3 this year. However, going by a quarter-on-quarter (q-o-q) analysis, net profit of the 467 companies mentioned above show a negligible growth of just 1.72% over the previous quarter. The only consolation for corporate India is the fact that it managed to break the q-o-q downward trend it had been witnessing since the first quarter of the current fiscal.

But then, not all is well with whatever small growth India Inc. managed in the last quarter over the second quarter. Apart from Tata Steel, TCS and NTPC, no other company among the top 10 profit makers has witnessed a bottom-line growth of over 5%. Worse than that, profit after tax for three of them have gone down in Q3 over Q2 (including a 40% fall by the country’s largest public sector units- ONGC. SBI and Wipro are the other two) and two of them have grown less than 1%, stating that big brothers among the Indian companies have failed to deliver; leaving it to the small and medium companies with smaller base to do the job. Even the numero uno in the country in term of profits, Reliance Industries, (RIL) too has shown a hairline rise of merely 4%.

However, a report card revival in the small and mid-cap companies is probably the biggest fact to be cheered about in corporate India’s results for the last quarter. Despite their low-base, one should not take away the credit from companies like Hindustan Copper, AIA Engineering, Areva T&D and Panacea Biotec et al, which have seen their bottom-line growing by over 100% in the last quarter on a quarter-on-quarter basis. Not to mention that the small and mid-cap companies have also got a strong back from big investors like the Foreign Institutional Investors (FIIs). As per a study conducted by CNI Research on small and mid-cap companies, FIIs increased their stake in as many as 322 companies in the last quarter. In 259 of those companies, the FII’s raised their stake by up to 2%.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.
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