RSSIndian IT Services firms – Good Valuation
The valuations of Indian software services firms are rich compared to its global peers, but such value is justified given their better growth rates and prospects, said citigroup global markets in a recent report post January-March earnings. "Management commentary across the sector remained positive. All the companies remain positive on the pipeline and the hiring remains robust. We believe that while 4Q was below expectations, the outlook remains strong, as highlighted by Infosys, Satyam guidance and management commentary from other majors.," it said.
Citigroup said growth of these companies will largely continue to be driven by gains in market share at a time when there are indications of relatively muted IT spending environment. "The market share data continues to be very volatile on a qoq (quarter-on-quarter) basis. Indian companies market share coming off could be explained by no large deal announcements in the quarter the previous quarter had witnessed the $1b announcement by Tech Mahindra," it said.
Citigroup prefers top-tier software firms such as Infosys Technologies, Tata Consultancy Services and HCL Technologies to the smaller ones. "Our view remains that companies with size, and a diversified presence across verticals and horizontals are better placed from a demand and supply perspective," the investment bank said.
On the impact of US slowdown, Citigroup said, "While we do continue to monitor it (US slowdown) closely, our view remains that a sharp slowdown could impact Indian IT services growth in the short run but a soft landing would not really impact growth rates."
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A note of reality needed here real foundations on firms like TCS, not getting over awed by valuations or superficial statistical figures..I used to work in Tata Consultancy Services earlier. Frankly, I was shocked to see the level of staff exploitation as well as lack of ethics in their client work culture, contrary to the general impression created by them to the Industry abroad. I remember that they completely copied a major Benchmarking study from one client to another without any sincere effort altogether. It is sad to see the Industry running after and incredibly enriching these kind of firms, who fundamentally grew from highly unethical and exploitation driven business models. Also, it may surprise many of us to know the hard fact that none of the good and qualified professionals stayed long in TCS over the past many years. All the good genuine professionals with initiative and ideas were harassed and suppressed by the highly predominant low quality and less educated old timer staff in TCS, and left the firm after demotivation in this environment. Result it that all the low quality and less educated people have stuck to TCS past 10-20 years and occupying most of senior positions nowadays, while 95% of the good qualified people left due to demotivation and harassment etc.. LET THIS BE A CHALLENGE TO TCS, IF THEY CAN REFUTE THIS FACT.. There are hundreds and maybe thousands of ex TCS employees who can vouch for this sad fact..