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earnings | IST

Expect Infosys to outperform TCS on growth: JM Financial

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In an interview to CNBC-TV18, Manik Taneja, Research Analyst-IT Services, JM Financial Institutional Securities said, “Between three names that announce results today, I would wager a bet on Infosys. He said that even this year Infosys will outperform TCS on growth.

It is a big day of IT earnings as Infosys, Mindtree and Wipro will be reporting their second-quarter earnings.
For Infosys, the street is looking at a dollar revenue growth of 5.5 percent, in constant currency terms a growth rate closer to 6.5 percent – the highest in organic terms in the tier-I companies. Revenue growth will be driven by the ramp-up of the large deal win with Daimler that they had.
Wipro is the stock, which has seen the biggest rerating, the stock is up 70 percent year-to-date versus Infosys or Tata Consultancy Services (TCS) which have gained about 35 percent and 40 percent respectively.
In an interview with CNBC-TV18 Manik Taneja, Research Analyst-IT Services, JM Financial Institutional Securities said, “Between three names that announce results today, I would wager a bet on Infosys. The fact that Infosys is likely to raise their revenue guidance that is the base expectation on Infosys. Infosys has had relative growth momentum on their side compared to Tata Consultancy Services (TCS), so they outperformed TCS on growth both in FY20 and 21. Given whatever we have heard over the last few quarters and their guidance, it looks to be the case that even this year Infosys will outperform TCS on growth.”
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On Wipro and HCL Technologies Taneja said, “If you look at the last three months price action, you will reckon that HCL Tech and Tech Mahindra, the two so-called a laggard in the tier-1 space, have done some amount of catch-up. Although they still continue to underperform, or would have underperformed the likes of Wipro on a calendar year in their business."
The street is expecting Mindtree to report a strong revenue growth quarter
"For Mindtree, the margin decline for them is likely to be limited, despite the attrition as well as the wage increments that they implement this quarter.” said Taneja.
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