Capgemini (CAP FP) France
Technology
CAP's share price has shown weakness since the announcement of a below-consensus guidance for FY25, highlighting concerns about its underperformance compared to peers and the delayed recovery of the IT services industry. Its revenue mix, with significant exposure to manufacturing in Europe, limits its growth compared to offshore competitors like TCS, Infosys and Cognizant, which are benefitting from recovery in financial services. Despite AI creating high expectations, its impact on bookings remains limited, causing delays in decision-making; however, AI presents significant opportunities in IT services as it drives demand for business transformation.
Edition: 206
- 07 March, 2025
Indian IT Services: Where are we in the growth cycle?
Technology
The large Indian IT services companies experienced an elaborated revenue growth cycle from the Covid pandemic lows peaking during mid-2022 with above-average constant currency Y/Y growth rates. This was followed by a sharp correction during 2023 with Wipro significantly underperforming its peers. Infosys has also lagged both Tata Consultancy Services and HCL Technologies. While 4Q24 results recently showed the first signs of a bottoming in the growth rates, leading to anticipation in the market that we should see an acceleration over the medium term, based on current valuation levels Wium Malan finds very little upside for these stocks.
Edition: 185
- 03 May, 2024
Indian IT Services
Technology
Following the purple patch of growth experienced in the wake of accelerated digitisation following the global pandemic, revenue growth has continued to slow down. Operating margin deterioration has also continued, despite significant FX tailwinds, largely due to the inflationary impact of increased employee attrition rates (to record levels) across the industry. Given weakening near-term growth prospects and above-fair valuation levels, Wium Malan remains cautious on the sector. In this insight, he focuses on the four largest companies in the sector - Tata Consultancy Services, Infosys, HCL Technologies and Wipro.
Edition: 148
- 11 November, 2022
GEM Funds Investor Positioning Insights: India maximum divergence
Stephen Holden’s data highlights the growing divide between Value and Aggressive Growth managers in India - while Aggressive Growth investors double down, especially in Financials and Tech, Value managers are finding fewer opportunities to invest, and appear comfortable allowing their underweights to increase. That’s not to say there are no Value opportunities in India, just not enough to match either the benchmark weight, or the weight of their Growth peers. As the world focuses on a potential Growth to Value switch, in EM at least, India will be a key driver of relative performance between the two sets of investors.
Stocks highlighted include HDFC Bank, Housing Development Finance, Indian Oil Corp, Infosys and Tata Consultancy.
Edition: 134
- 29 April, 2022
Indian IT Services: Unattractive outlook
Technology
Will increased dividends and buybacks be sufficient to support current elevated valuation levels? Following 2 years of exceptional performance driven by accelerated digitalisation in the wake of the Covid pandemic share prices have started to correct. While demand remains robust, revenue and earnings growth rates are decelerating. Wium Malan's report focuses on the prospects of the 4 largest companies in the sector - Tata Consultancy Services, Infosys, HCL Technologies and Wipro.
Edition: 129
- 18 February, 2022