Infosys' revenue growth in FY23 likely to be better than TCS: Moody’s

The ratings agency gave both the Indian IT giants Baa1 ratings, but noted that it expects 13 per cent revenue growth for Infosys and 8 per cent revenue growth for TCS in the financial year ending on March 31

Moody’s Investor Services, an international financial ratings company, released a report on Wednesday highlighting that IT major Infosys’ revenue growth is better than that of its competitor TCS for the current financial year.

The ratings agency gave both the Indian IT giants Baa1 ratings but noted that it expects 13 per cent revenue growth for Infosys and 8 per cent revenue growth for TCS in the financial year ending on March 31.

Despite decent revenue growth in the financial year 2022-23, the Moody’s expects the growth to moderate for both companies in the next year. Infosys’ revenue growth is expected to fall to 8 per cent, while TCS’ revenue growth is expected to decline to 5 per cent in the next financial year.

The report highlighted that Infosys needs to improve employee affairs like hiring and attrition to brace for the global uncertainties. “Improving employee utilisation from hiring in prior years and steadily declining attrition amid global uncertainties will likely arrest any further margin pressure, with its EBITDA margin remaining around 24 per cent over fiscal years 2024 and 2025," stated the report.

The report had a similar commentary in the case of TCS, “Improving employee utilisation from hiring in prior years and declining attrition in the backdrop of global uncertainties will likely arrest any further margin pressure, with its EBITA margin remaining around 25 per cent over fiscal years 2024 and 2025.”

Despite moderation in revenue growth, the rating agency has affirmed a stable outlook for both the IT companies.

“Moody’s Investors Service has today affirmed the Baa1 local currency issuer rating of Infosys Limited. The rating outlook remains stable,” the ratings agency said about its outlook for Infosys.

Moody’s Senior Vice President Kaustubh Chaubal shared a similar view about TCS. He said, “The company’s good corporate governance practices, reflected in its extremely strong balance sheet, large liquidity and net cash position, are a key credit strength supporting its `Baa1′ rating.”

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