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Slowdown in TCS to weigh on Tatas' growth ambitions

TCS' cash generation has funded capex at other group entities for over a decade

Krishna Kant  |  Mumbai 

Tata Consultancy Services’ (TCS’) revenue growth in 2016-17 was the slowest since 2008-09. For the first time since its stock exchange listing in 2005, both revenue and profit growth was in single digit for the software major. This, say analysts, could impact Tata group’s growth plans. TCS’ cash generation has helped the Tatas maintain a growth streak despite poor profitability at the rest of the group since the 2008 global financial crisis. On the previous occasion, the company experienced a V-shaped recovery. This time, analysts see a structural ...

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Slowdown in TCS to weigh on Tatas' growth ambitions

TCS' cash generation has funded capex at other group entities for over a decade

Tata Consultancy Services (TCS) revenue growth in FY17 was slowest since FY09 and first time since its listing in 2005, both topline and bottom line growth was in single digits for the software major. This the analysts say could have a big impact on the Tata group growth plans given surplus cash has been helped Tatas' to maintain their growth streak despite poor profitability of the rest of the group since the 2009 Lehman crisis. (See the adjoining chart)While on the previous occasion, the company experienced a V-shaped recovery, this time around analysts see a structural slowdown in global IT leading to sub-par growth for company. "I don't foresee any immediate pick-up in the IT sector growth for at least two years. This would translate into single digit growth for most Indian IT companies during the period," says G Chokkalingam, founder & CEO Equinomics Research & Advisory. Earlier this month, Garner cut worldwide IT spending growth in 2017 to 1.4 per cent from its earlier .. Tata Consultancy Services’ (TCS’) revenue growth in 2016-17 was the slowest since 2008-09. For the first time since its stock exchange listing in 2005, both revenue and profit growth was in single digit for the software major. This, say analysts, could impact Tata group’s growth plans. TCS’ cash generation has helped the Tatas maintain a growth streak despite poor profitability at the rest of the group since the 2008 global financial crisis. On the previous occasion, the company experienced a V-shaped recovery. This time, analysts see a structural ... image
Business Standard
177 22

Slowdown in TCS to weigh on Tatas' growth ambitions

TCS' cash generation has funded capex at other group entities for over a decade

Tata Consultancy Services’ (TCS’) revenue growth in 2016-17 was the slowest since 2008-09. For the first time since its stock exchange listing in 2005, both revenue and profit growth was in single digit for the software major. This, say analysts, could impact Tata group’s growth plans. TCS’ cash generation has helped the Tatas maintain a growth streak despite poor profitability at the rest of the group since the 2008 global financial crisis. On the previous occasion, the company experienced a V-shaped recovery. This time, analysts see a structural ...

image
Business Standard
177 22