Q: Hi There,
Could you please comment on the differences between these 2 companies including software product/services, revenue and profit growth going forward, acquisition strategies, overall valuation.
Is it prudent to own both for growth in a diversified portfolio or too much overlap?
Ok thanks so much!
Could you please comment on the differences between these 2 companies including software product/services, revenue and profit growth going forward, acquisition strategies, overall valuation.
Is it prudent to own both for growth in a diversified portfolio or too much overlap?
Ok thanks so much!
5i Research Answer:
Though both VHI and TCS are classified as software companies, each has a different business model and growth story. TCS’s solutions help customers in supply chain management. Its growth has been solid and driven mostly organically with minimal acquisitions. On the other hand, VHI is more of a serial acquirer (similar to CSU), VHI’s solutions target customers in the healthcare segments, and its gross margin on average is also around 80%, however, VHI’s growth is driven primarily through acquisitions. We don’t see any overlap between the two companies and would be comfortable owning both.