TCS Is On The Positive Side As Infosys Looks On
Bangalore: The performance of Tata Consultancy Services seems to be around expected lines with 1.25 percent business growth. The sequential revenue growth of 3.3 percent was in contrast to its peer Infosys which reported a good 4.2 percent increase, backed by a good jump in received projects. The operating efficiency and performance of both the companies were also in contrast.
When Infosys saw its fourth consecutive fall in the operating margin, TCS came up with a marginal improvement of 50 bps in the previous quarter. Since December 2011, it was seen that Infosys suffered a sharp drop of 550 bps even after the company focused on its protecting margins. But TCS saw a relatively lower margin drop of 200 bps.
The last four quarters had TCS performing better in terms of a profitability of 27.3 percent in the December quarter while Infosys stood at 25.7 percent. From the 12 months data recorded, it seems like no joke but Infosys looks like it has been compromising on margins to grow revenue. Even TCS at 27.5 percent profit was just 10bps lower than Infosys, reports TOI.
This seems to be challenging for Infosys which has so far taken pride in its revenue generation. If the company does not focus here, then TCS will be looked at gaining better shape and growth as well as margin fronts.
According to Economic Times, the graph emphasizes on TCS, with its ability to widen revenue and net profit gap with Infosys. In the last five quarters till December 2012, TCS was $ 3.9 billion more than Infosys’s topline in the dollar-denominated mode.
Though the gap was much smaller at $2,942 million, a year ago, the gap in the net profit has widened to $740 million from $499 by similar comparison. TCS has also had an advantage of increase in larger client accounts. The company had reported an increase in the number of larger active clients at various ticket sizes, including $50 million and $100 million.
With a rise from 1,001 to 1,051 active clients, the company seems to show a positive sign in improving revenue possibility. Infosys will have to focus on its growth consistency which seems to be very crucial at this point.
