Auto Segment
Mutual Fund Segment
My Budget
Expert Speak
In Association With
Business Standard

StatsGuru: 30-April-2012

Related News

The quarter ended March 2012 has not been stellar for many Indian IT companies. As Table 1 shows, Infosys did poorly, and even market leader reported sluggish quarter-on-quarter revenue growth. Is there a trend towards slower or more volatile growth in the sector? Infosys, in its much-read guidance, suggested that it was going after “non-linear” growth, with productivity per employee increasing. Some suggest this means temporarily skewed results, following a focus on heavy, procyclical sectors like banking, financial services and insurance (BFSI). Yet, as Table 2 shows, net profit growth has been volatile for the past three years. (Click here for tables)

Analysts have focused on two questions. First, what is Infosys going to do with its cash pile? As Table 3 shows, it has not matched TCS in its dividend payouts over the past five years. However, as Table 4 illustrates, it is sitting on a considerable cash pile. Why is it stockpiling cash? Thus, the second, related analyst focus: changes in revenue streams geographically and by customer profile, in order to work out whether the Indian IT industry’s going through a lengthy transition. Infosys has seen a big fall in its North American business, and TCS in Europe, as Table 5 shows. Is this temporary or structural? A comparison with large American IT firms (Table 6) suggests hard times everywhere. Almost all the relevant divisions of US firms showed slow year-on-year revenue growth; and it is getting worse, with the last reported quarter particularly bad. As Table 7 suggests, Infosys’ focus on is less than other Indian majors, and indeed less than that of the relevant divisions of US firms. Volatility, thus, should perhaps be expected, but with downside enhanced: The index tracks this, but has been more volatile than the Nifty, as Table 8 shows, but it has underperformed the market since December — even though both have increased.

Read more on:   

Read More

Review the Indo-Mauritius treaty, but business must be allowed to continue: Rama Krishna Sithanen

Foreign investments routed through Mauritius, with which India has a double taxation avoidance agreement (DTAA), have been the subject of controversy ...

Recommended for you

Quick Links

Financial X-Ray Rss icon

Vision statement unlikely to boost corporate earning

Markets will find it hard to justify stretched valuations in the face of single-digit earnings growth

Will the Budget deliver big bang reforms?

Economic Survey rules out need for such reforms; analysts believe fiscal tightening, rural stress and political debacle might be restrictive


Back to Top