At TCS, slow conversion rate of orders into revenue adds to seasonal softness

For Tata Consultancy Services Ltd (TCS) shareholders, 2018 was remarkable—after all, the stock had appreciated as much as 43%. In comparison, 2019 has been slower. But that isn’t much to crib about, considering that the stock has increased by 15%.

Given the premium valuations, investors’ focus is invariably on the growth momentum. On this front, year-on-year constant currency revenue growth has slowed to high single digits in the September quarter to 8.4%. For the June quarter, it was at 10.6%. If the recent interactions of the TCS management with analysts are anything to go by, business environment may remain soft for some more time.