The IT Index saw deep cut in trade on Friday with Infosys shares registered the biggest dent as the street worried about the sustainability of its revenue trajectory. While announcement of TCS Q3 results cheered the market on hopes of a revival in IT deal spends, the expectation that Infosys may have a muted Q4 was decidedly a party pooper.
Comparing the performance of the two major tech belwether in India, DD Mishra, VP Analyst, Gartner highlighted that “TCS and Infosys have both managed to grow in a difficult environment while protecting their margin growth. Although discretionary spending is under pressure and has been below our expectations, but overall, we still anticipate that IT Services spending will grow as per our forecast.”
Here is a quick look at some of the key metrics and how both companies fared on these counts-
Infosys vs TCS: Discretionary Spend
In case of Infosys, the upward revision in the FY25 revenue guidance was primarily on the back of a faster recovery in discretionary spends across the BFSI, retail and consumer verticals. According to the management, the focus is more on cost-takeout deals than on discretionary spends. However, they are positive about the outlook for near-term discretionary spend.
Also ReadWhy is Infosys falling? 4 factors worrying investors are…
TCS meanwhile maintained that there is improvement in discretionary spending and shorter deal cycles. BFSI and telecom are the two sections that they are expecting meaningful improvement in discretionary spend.
Comparing the performances of both Infosys and TCS in Q3, Siddhartha Khemka, Head of Retail Research, Broking and Distribution at Motilal Oswal Financial Services outlined that, “Infosys Q3 headline numbers were strong but revenue was generated primarily by passthrough so it has led to a doubt in the investor’s mind about the sustainability of the revenue trajectory. There are expectation of revenue decline in Q4, about 1% dip QoQ. The market is cautious as a result. Infosys may remain subdued for next quarter.”
Infosys Vs TCS: Deal Pipeline
Infosys management indicated that the company is seeing better client traction in for enterprise AI capabilities, particularlygenerative AI. This as a result helped the tech major clock strong large deal wins and healthydeal pipeline. However,
» Read More
