TCS eyes Japanese IT market

Mon, 15 Feb 11:30 am

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The Indian markets continued to trade on a weak note during the previous two hours of trade. Currently, selling activity being witnessed in realty, telecom, banking and consumer durables sectors is weighing heavily on the indices. However, the stocks from healthcare, auto, power and IT sectors are managing to garner investors' interest.

The BSE-Sensex and the NSE-Nifty are currently trading lower, down by around 71 points and 29 points respectively. While the stocks from the midcap space are trading in red with BSE-midcap index down by 0.2%, small cap stocks are finding favor with the BSE-smallcap index trading higher by 0.3%. The rupee is trading at 45.37 to the US dollar.

As per a leading business daily, India's largest engineering company BHEL, has won an order worth around Rs 10 bn from Bhutan. This contract from Bhutan's Punatsangchhu Hydroelectric Project Authority, requires BHEL to manufacture, supply, erect and commision equipment to a 1,200 MW hydro power project. It is a bilateral contract between the government of India and Royal Government of Bhutan.

It may be noted that at the end of December 2009, BHEL's order backlog stood at Rs 1,340 bn, i.e. about 4.8 times its FY09 annual sales. We believe that as BHEL continues to bag big orders, it is on track to achieve its sales guidance of Rs 320 bn for the full year FY10. BHEL is the top gainer on BSE today.

According to a leading business daily, India's largest IT services exporter, TCS is betting big on the Japanese IT market. Japanese IT market which is the second largest in the world after the US, is one of the fastest growing IT market globally and is expected to touch revenues of US $1 bn in medium to long term. However, Indian IT companies have so far not been able to make significant headways into the market. TCS is now aiming to tap this market and is working on suitable business model for the same. It may be noted that the corporate culture and business environment in Japan is very different as compared to Indian IT's largest market - the US.

TCS is exploring strategies like local hiring and acquisition in order to build relationship with the Japanese customers. It counts Toshiba and Shinsei Bank as its marquee clients in Japan. We believe that Indian IT will do well to diversify focus from the mature western markets and divert attention towards the Asia Pacific and Middle Eastern markets which have a huge potential of driving incremental growth.