Cognizant Q2 Review - Concerning Industry Commentary; Growth Lowered; Booking Growth Weak: Nirmal Bang

Nirmal Bang Report

While Cognizant Technology Solutions repeated a lot of the robust-in-the-near-term management commentary expressed in the June quarter 2022 results by many of its Indian peers, it also revealed some internal dynamics in the market, which to us seem concerning:

• there was talk of push-out in deal pipeline conversion by clients. This ties into the slightly sluggish order inflow that we have seen on an aggregate basis for the tier-I universe both on YoY as well as QoQ basis. The push-out is probably leading to a situation where pipeline has bulged up to the ‘highest ever’ level based on remarks by some of Cognizant’s Indian peers. This, in our view, Is a negative and not a positive as is generally being made out to be.

• there seems to be fewer number of smaller sized deals in the market – something we had highlighted as a risk factor in our recent industry notes. While these had driven growth in FY22, the visibility on these is low and that they could be switched off quite easily should circumstances change. That is precisely what seems to be happening. And this could have a bigger impact on tier-II companies.

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.