Published on 11/08/2017 3:39:11 PM | Source: Motilal Oswal Securities Ltd
IT Sector Update - Motilal Oswal
BFSI: Size leaders turn growth laggards
Appended below is the performance of BFSI in the June quarter for the five biggies:
* Interestingly, the size of operations contrasts the YoY growth in constant currency. Note that BFSI was the fastest/second fastest growing vertical for the three smaller players (INFO, WPRO and HCLT), and was the key drag at CTSH and the worst with the exception of Retail for TCS.
What they said?
* In its quarterly earnings commentary, CTSH noted that YoY growth was driven mostly by Insurance. Large money-centered clients are still taking a conservative approach and focused on cost take-out. This is being partly offset by mediumsized banks.
* TCS cited that while it is winning deals, the trend is not homogenous enough to give confidence around change in fortunes. It needs to see more in the pipeline before expressing greater confidence. While hawkish as CTSH on BFS, it was also in sync with the latter w.r.t positive commentary around Insurance.
* INFO shared that revenue growth in the BFSI vertical is expected to bounce back 2HFY18 onward because of a lag between an improving macroeconomic situation in the US and that translating into higher spend. It expects to disproportionately benefit from this trend.
* HCLT’s commentary – expectedly bullish, citing significant new account wins in BFSI in North America. At WPRO, momentum in BFSI is particularly seen in Digital, and is reaping the benefits of large deal wins on the back of its Digital proposition.
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