Cognizant cuts CY2016 guidance to $13.5 bn

Ravi Menon of Elara Capital said that Cognizant’s guidance cut shouldn’t be seen as disappointing.  Karan Tolani of  Dolat Capital, the guidance cut was disappointing. He added that the guidance cut may be on account of currency fluctuation, but on a constant currency basis, there wouldn’t be much of a difference.Below is the transcript of Ravi Menon and Karan Taurani's interview to CNBC-TV18's Kritika Saxena and Reema Tendulkar.Reema: So far what we have how are you reading Cognizant numbers and your key takeaways?Menon: I think that the guidance cut is probably due to the GBP depreciation. Don't really feel it is very disappointing. Reema: Are you disappointed by another guidance cut by Cognizant?Taurani: It is another guidance cut but it is largely because of the currency impact which is there. I don't think on a constant currency basis there will be much of revision.Reema: What does this tell you for what the coming quarters are going to look like for Cognizant because it is still going to be a single digit growth year for Cognizant and clearly it was Cognizant which was the bellwether of growth compared to the other IT majors?Taurani: Growth has been lowering for the Indian IT vendors also and this is inline if you see. The range of 8-10 percent remains to be maintained. Cognizant is now coming more towards that range of growth of Indian IT vendors. That delta outperformance factor is now not there anymore for Cognizant.Kritika: How long do you expect the softness to continue because if you remember last quarter it was M&A, consolidation in healthcare , delayed projects coming in and softness in BFSI. How long will this continue for Cognizant?Menon: I think part of the issue is the healthcare exchanges in the US, they have not been as attractive as the players had hoped. So, you have seen many players exit healthcare exchanges, many of them take write downs. So, I assume that this will have some impact on the spending on IT related healthcare exchanges.M&A among the players that also continued over the year. So, I think it would take at least another year for healthcare to really pickup. Cognizant does not have much of exposure to energy but they have recently acquired a firm in Norway for energy and they are probably expecting a pickup there. So, that is another large segment, for Indian IT that has been under pressure.