We believe the 7.5%-9.5% constant currency (CC) revenue growth guidance for FY20 (inclusive of inorganic elements) of Infosys looks a bit conservative with: (1) total large deal TCV in FY19 at >2x that of FY18 and new deal TCV at 3.4x and that too spread across multiple verticals.
Infosys reported inline Q4FY19 revenue performance but sharp miss on margins due to large deal impact & investments on people. Management guided a lower than expected revenue growth for FY20E due to uncertain macro environment.
The return on Equity for Infosys is expected to increase from 20.7 percent in FY17 to 24.3 percent in FY20 while for TCS, the RoE is expected to increase marginally from 33.5 percent in FY17 to 34.8 percent in FY20.
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