Mgmt clarified what they are doing on the Watson front in last concall in detail. This could be a big segment for them going forward, and Mr. Anand was pretty much upbeat on the developments.
Regarding Digital, he was again very upbeat, and said this would be the main area of growth in coming qtrs/years.
Regarding margin improvement, i got a feeling that it is going to remain around 15-16% for next year or so. Reasons - Their usual service business is stagnant, and is not growing much, rather there is a pressure on margin front here. IBM Watson, will probably take a few years to break even. Utilization levels are almost at peak at 78%. I don;t think there can be much improvement on this front.
Another big negative for all IT Companies is USD-INR exchange rate. Rupee has strengthened quite a bit from 67-68 to 65.4 levels in short time. I am not sure about their hedging policies. If they are not, they might take a big hit, which can further reduce bottomline margins.
I am positive on this business in medium to long term, as i like what they are doing on digital front and with IBM Watson. Key is margin improvement, which has fallen from 20% to 15%. This can happen as revenue from IP grows significantly.