BQ Prime's special research section collates quality and in-depth equity and economy research reports from across India's top brokerages, asset managers and research agencies. These reports offer BQ Prime's subscribers an opportunity to expand their understanding of companies, sectors and the economy.
Nirmal Bang Report
Doing a read-through for the Indian IT services industry from Cognizant Technology Solutions' performance, guidance and commentary has not been a fruitful exercise in the past as it has faced issues specific to itself. But we believe this may be changing.
The 28% YoY growth in order inflow for Cognizant in Q1 2023 probably reflects the first positive signs of impact of the new CEO, Ravi Kumar. It was indicated that Cognizant won four large deals with total contract value greater than $100 million unlike zero in the base quarter of Q1 CY2022.
Also, growth in deal bookings in the financial services vertical was higher than for the overall company. While it is unlikely to show up materially in the revenue growth numbers in 2023, we believe this represents a leading indicator of the fight back from Cognizant.
We believe peers like Accenture, Tata Consultancy Services Ltd., Infosys Ltd. and others have likely benefited from the loss of share by Cognizant in the last four-five years due to poor management and execution.
We believe CY23 guidance of (1)-1% growth (inclusive of 100 bps of inorganic growth) is a weak number is likely reflective of the weak bookings in 2022 (~4.5% YoY) and the decrease in short cycle orders which the industry (and company) was dependent on for growth during the pandemic phase.
Cognizant indicates that company specific issues and operational challenges especially in financial services vertical are largely behind it. The early signs of a fight back do not represent good news to its Indian peers.
Also, Cognizant's views on pricing and the impact of generative artificial intelligence on the industry too are not very positive. While it has been our view for the last 12 months that pricing will be hit in the upcoming slowdown, commentary from most players has been sanguine thus far.
Click on the attachment to read the full report:
DISCLAIMER
This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
