BENGALURU: Infosys reported better growth numbers than TCS in the quarter ended September. This is the second successive quarter where it has beaten TCS, after lagging it for a long time.
The company fired on all cylinders, with the flagship banking, financial services and insurance (BFSI) vertical doing particularly well.
In the quarter, Infosys’ revenue grew 11.4% on a constant currency basis compared to last year. Constant currency discounts the impact of cross-currency fluctuations. In comparison, TCS grew at 8.4%, after four quarters of double-digit growth. In reported terms, Infosys’ revenue was up 9.9%, higher than TCS’ 5.8%.
“In financial services, we have had a decent run with a few quarters of double-digit year-on-year growth,” CEO Salil Parekh said. BFSI growth rate was 10.3%, compared to TCS’ flat growth.
The numbers helped the company raise the lower range of its revenue guidance for the year to 9% from 8.5%, though it kept the upper range intact at 10%.
“There is some weakness in capital markets and we see Europe as a geography to be softer. There is some impact of Brexit,” Parekh cautioned.
The company’s shares on the NYSE were down a little in morning trade after rising initially. The results were announced after markets closed here, but the stock ended Friday’s trade 4% higher at Rs 816, while TCS’ was down 0.9% at Rs 1,987. Investors seem to have increased exposure to Infosys because of TCS’ tepid results.
The retail vertical continued to be a pain point, growing just 1.1%. “Retail is closely linked to consumer sentiment. The spends in retail have come down and, in the last quarter and this, we have seen some softness and slowdown,” chief operating officer Pravin Rao said.
Infosys is transferring the business of its wholly owned subsidiary Skava (Kallidus and Skava are together referred to as Skava) to itself, subject to regulatory approvals for a consideration based on an independent valuation. Infosys’ margins went up 1.2% to 21.7% compared to the preceding quarter, which it attributed to higher utilisation of employees and greater offshoring of work to India.