Capgemini reports better performance in April-June than Indian peers

Bengaluru, 31 July Global technology major Capgemini has reported better revenue growth than its Indian peers owing to its higher exposure to Europe, where in demand environment remained resilient.

In the April-June quarter, the IT major reported a revenue growth of 5.2 per cent over the same period of last year. While the UK as a geography witnessed a revenue growth of 10.2 per cent YoY, France saw a growth of 6.2 per cent. Rest of Europe grew 9 per cent during this period.

“Capgemini’s revenue growth was better than Indian IT peers’ in June, 2023 quarter because it has higher exposure to Europe (62 per cent of revenue) and verticals where demand is still resilient. The company drew 27 per cent of revenue from manufacturing and 14 per cent from public sector. Management mentioned that manufacturing grew at a healthy double-digit rate even in the US. We have seen similar healthy performance in the manufacturing vertical for Indian IT companies,” ICICI Securities wrote in a note.

The Europe-headquartered company retained its revenue growth guidance of 4-7 per cent in constant currency term for 2023 fiscal year. Capgemini follows January-December fiscal year cycle. However, the full-year growth is likely to be at the mid-point of its given guidance, the management said.

“This is largely due to higher-than-expected softness in the US driven by weakness in key verticals – BFSI, telecom, technology, consumer goods and retail. Capgemini management mentioned that they expect growth to decelerate in second half of 2023 with more clients focussing on reducing costs, especially in the US, while Europe is fairly resilient. It continues to see longer decision-making cycles as reflected in soft bookings growth (one per cent rise YoY) in April-June quarter,” the brokerage firm added.

Indian IT firms have also seen a similar trend with technology demand remaining sound in Europe, while the US as a geography showing significant weakness.

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