TCS took a beating in its first quarter of FY18

One of the headline numbers for TCS is that its legacy verticals are struggling, growing 1.5% YoY. The large IT firms including TCS are seeing significant stress in BFSI accounts. This vertical had shrunk QoQ in the previous quarter for TCS, and grew in Q1FY18 due to smaller accounts coming on board. With Britain continuing towards a hard Brexit, this vertical is expected to underperform for a while, according to analysts. While the company insisted that there was "no structural problem" at its post-results press conference,  the emphasis on digital and automation technologies is compelling large Indian IT firms to change the way they are doing business, and the jury is still out on how firms like TCS will respond. 

Cyient's muted Q1 on the other hand, holds some good news

Cyient 1QFY18 numbers were lower than expected due to a fall in its high margin Design Led Manufacturing (DLM) business, which accounts for 9% of the company's revenue. DLM fell 26% QoQ (but grew 17.5% YoY in USD). The fall was offset somewhat by growth in core services, but investors were spooked nonetheless, with share price falling for Cyient after results. 

Analysts like HDFC Securities who took a closer look at the numbers however, pointed out that DLM saw a seasonal drop, and that management projects a sharp growth in FY18, with the company already seeing substantial order bookings for the second quarter. Other verticals are showing  growth for this IT specialist firm - the Aerospace & Defence and the Transportation verticals grew 1.9% and 11.8% QoQ. Communication expanded 10.1% QoQ. Margins are expected to regain with DLM growth recovery, and the management sounded a bullish note for the rest of FY18.