Demand not sensitive to pricing, says TCS
TCS told analysts that a global recovery may be slow, but it is happening and that the recent fall in the rupee will certainly boost performance, reports CNBC-TV18's Reema Tendulkar.
Tech bigboy Tata Consultancy Services (TCS), which has been outperforming its peers of late, says things are coming along nicely as far as the global business environment is concerned.
The company told analysts that a global recovery may be slow, but it is happening and that the recent fall in the rupee will certainly boost performance, reports CNBC-TV18's Reema Tendulkar.
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TCS held an analysts call on Friday evening, which tells us how the Q2 is likely to pan out.
On the subject of demand they said that the year is turning out largely inline with expectations which means FY14 is going to be better than FY13. The first half is going to be better than second half.
They say that growth is driven by broad based recovery in US as well as increasing penetration in Europe. However, they said India is a bit volatile and it looks flattish to them as of now. Most of the industry verticals are showing growth but perhaps telecom is a bit of a concern as of now.
On being asked if the Indian IT companies are seeing any kind of pricing pressure, they said, so far there is no real impact nor do they think that Indian IT is as sensitive to pricing on account of currency.
Answering a query on what benefit they see from rupee depreciation, they said they see a significant benefit.
They said if rupee stays at levels of 65-68/USD roughly they see a benefit to the rupee revenues by 10-13 percent. And on margins they see a positive impact of 275-300 basis points. However there is likely to be a cross currency headwind of 1-1.5 percent to their dollar revenues.
They also mentioned that because of currency depreciation there is likely to be a forex loss somewhere around Rs 550-700 crore but as of now they have not undertaken any kind of a change in hedging policy.
Analyst’s felt the commentary from TCS was positive and was largely inline but they are just a bit disappointed with the large forex loss.