- TCS does not expect "runaway growth" in 2013-14, but the company expects to better its fiscal year 2012-13 growth of 16 per cent (constant currency terms). TCS grew 13.7 per cent in US dollar terms.
- Discretionary spending to drive growth: TCS says US clients are moving from a "cost reduction to a growth-oriented mindset". This could reflect in better budgeting in FY15 in the company's view.
- Underpenetrated verticals to drive growth: TCS sees stronger growth in retail and manufacturing and in smaller underpenetrated verticals such as energy & utilities and healthcare. Banking financial services and insurance (BFSI) would largely decide the company's average growth, and telecom could be softer. ERP demand could be soft.
- Weak rupee to add to September quarter margins: TCS will, however, not derive a sustainable advantage from rupee depreciation because MNCs, too, have their incremental operations in low-cost locations like India. Also, price points are not materially different between TCS and its peers (Indian or MNC). Finally, rupee fall could provide some near-term quick wins, but the market is likely to adjust itself to the new rupee situation.
- Margin supremacy to continue: TCS says 500-600 basis points of the differential in margins versus peers is created because of i) lower attrition, ii) higher utilizations, iii) better client mining, iv) favourable portfolio shifts, and v) marginal premium on realizations. The margin differential is thus structural and difficult to replicate, according to the company.
- TCS does not expect "runaway growth" in 2013-14, but the company expects to better its fiscal year 2012-13 growth of 16 per cent (constant currency terms). TCS grew 13.7 per cent in US dollar terms.
- Discretionary spending to drive growth: TCS says US clients are moving from a "cost reduction to a growth-oriented mindset". This could reflect in better budgeting in FY15 in the company's view.
- Underpenetrated verticals to drive growth: TCS sees stronger growth in retail and manufacturing and in smaller underpenetrated verticals such as energy & utilities and healthcare. Banking financial services and insurance (BFSI) would largely decide the company's average growth, and telecom could be softer. ERP demand could be soft.
- Weak rupee to add to September quarter margins: TCS will, however, not derive a sustainable advantage from rupee depreciation because MNCs, too, have their incremental operations in low-cost locations like India. Also, price points are not materially different between TCS and its peers (Indian or MNC). Finally, rupee fall could provide some near-term quick wins, but the market is likely to adjust itself to the new rupee situation.
- Margin supremacy to continue: TCS says 500-600 basis points of the differential in margins versus peers is created because of i) lower attrition, ii) higher utilizations, iii) better client mining, iv) favourable portfolio shifts, and v) marginal premium on realizations. The margin differential is thus structural and difficult to replicate, according to the company.
The story is based on a note from Ashwin Mehta and Pinku Pappan of Nomura, who spoke to TCS' chief financial officer Rajesh Gopinathan, earlier this week.
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