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    Why TCS despite not meeting estimates for 7 out of 8 quarters has fallen the least? Mahantesh Sabarad answers

    Synopsis

    "Wipro has a considerable exposure on the energy side when it comes to its analysis from a vertical point of view and that has not yet turned stable. I would say what the investors look for in the stocks is the momentum gathering up in terms of top line through deal wins."

    Bank and IT sectors should lead the way for market  going ahead: Mahantesh SabaradETMarkets.com
    “Wipro has been coming off a weak base and therefore these numbers that you have talked about in terms of doing better relative to what they have done in the past has stood out but the deal win momentum has been quite strong for TCS relative to what it has been for Wipro. That tells us that TCS will be seen as better relative to Wipro and that is perhaps what the market is trying to tell us,” says Mahantesh Sabarad, Independent Market Expert

    We have got the initial set of numbers. Perhaps there is a clear indication from IT and some directional sense from HDFC Bank. What do you make of the numbers so far?
    If you look at the IT companies chiefly TCS and Infosys and look at the past four quarters’ EPS earnings now, I am not looking at the revenue numbers alone but what is interesting is on the EPS side, we will notice that the incremental EPS that they have done for this quarter has been among the best for the last four odd quarters for both Infosys and TCS. Plus TCS has paid a rich dividend as well.

    Most of the IT companies therefore had done really well on the bottom line, despite the headwinds that they have faced on the margin side. The margin was under pressure a couple of quarters back. Now they have recovered from those margin lows and are doing better.

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    Business growth which is on the top line side does not seem to have actually cracked or come down substantially in terms of momentum. The deal win pipeline is still good and so IT companies have done better.

    As far as HDFC Bank is concerned, clearly the deposit growth has been very slow, CASA has dropped and so despite the NPA worries not being there, what is being keenly watched is how is the deposit growth is now shaping up because credit growth has improved quite substantially but deposit growth has been pretty weak. This is where the NIMs could get compressed potentially going forward.

    Bloomberg data show that seven out of the last eight quarters, TCS has failed to excite market consensus estimates. Wipro has managed to beat the estimates six out of the last eight quarters but has fallen more than 40% in the last one year. TCS despite not meeting estimates for seven out of eight quarters, has fallen the least! Isn’t that ironic?
    So what one has to really look at is what is the deal pipeline win that these companies are doing, Wipro has been coming off a weak base and therefore these numbers that you have talked about in terms of doing better relative to what they have done in the past has stood out but the deal win momentum has been quite strong for TCS relative to what it has been for Wipro.

    That tells us that TCS will be seen as better relative to Wipro and that is perhaps what the market is trying to tell us. Moreover, Wipro has a considerable exposure on the energy side when it comes to its analysis from a vertical point of view and that has not turned stable. I would say what the investors look for is the momentum gathering up in terms of top line through deal wins.



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    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

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    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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