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Jan 16, 2013, 09.23 AM IST
No one can deny its been a stellar start to 2013 earnings with India's top two IT giants beating street estimates with their Q3 numbers. But one needs to see if they are able to sustain such performance going ahead.
"I think discretionary budget is looking up" says N Chandrasekaran, MD & CEO, TCS. On the other hand SD Shibulal, MD & CEO, Infosys says, "We expect the budgets to be flat or marginally down."
Different commentary have been emerging from the two IT giants this Q3. While Infosys is cautiously optimistic, TCS is positive . However judging by the initial suggestions from industry experts, discretionary spending from clients across sectors is expected to look up.
Govind Agarwal, senior analyst, IT sector, JM Fin says, "If you look at the last calendar year, there was hardly any discretionary spending in the industry and now clearly discretionary spending is coming back."
On the guidance front, while Infy expects a 5 percent growth, TCS hopes to beat NASSCOM's guidance of 11-14 percent. Also, when it comes to margins, TCS's metrics of maintaining margins amidst rupee fluctuations, have been comparatively more consistent and industry leading.
"Ultimately if the quality of revenue, if the growth is there, then the margin problems are all taken care of, whatever the exchange rate is," says S Mahalingam, CFO, TCS.
But Rajiv Bansal, CFO, Infosys says,"The only trouble that we are seeing of 0.2 percent is primarily because of rupee appreciation of 0.5 percent during the quarter."
However, both IT giants believe the challenges from the macro environment continue but outsourcing and dependency on technology by clients will continue. Also, both seem to be well positioned to meet pricing fluctuations, if any.
"On the pricing front, we manage the portfolio in a manner that does not impact the realised revenue productivity on a sequential," adds Bansal.
"I think you will see some productivity gains in a quarter and you will see it getting moderated in another quarter. But basically it has been stable," adds Chandrasekaran
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