As an investor, everyone is looking to invest in sectors which have strong growth potential in the long run. Over the past few years, Global Capability Centre has emerged as one of the key sectors to watch for. This sector has strong growth potential, characterised by higher profit margins.
In today’s blog post, we will give you an overview of the best Global Capability Centres Stocks in India, along with the benefits of investing in them.
Meaning of Global Capability Centres Stocks
A Global Capability Centre is a branch that is established by the multinational companies specifically to take care of the business functions, technology, research, and analytical processes in an offshore location that has low costs.
Such centres, or in other words, captive centres, allow the global companies to take advantage of the huge number of skilled people in a country and the low-cost operation. At the beginning, their focus was solely on back-office assistance, but now GCCs have transformed into strategic centres where different sectors exchange innovation, R&D, and high-value functions.
Top Global Capability Centres Stocks
- Tata Consultancy Services Limited
- Quess Corp Limited
- L&T Technology Services Limited
- eClerx Limited
- HCL Technology Limited
| Company | Current Market Price (INR) | Market Capitalisation (in INR crore) | 52-Week High | 52-Week Low |
|---|---|---|---|---|
| Tata Consultancy Services Limited | 3075 | 1112232 | 4495 | 2867 |
| Quess Corp Limited | 235 | 3500 | 379 | 232 |
| L&T Technology Services Limited | 4194 | 44515 | 5647 | 3855 |
| eClerx Limited | 4345 | 21328 | 4640 | 2116 |
| HCL Technology Limited | 1524 | 413062 | 2012 | 1303 |
Read Also: Best Data Center Stocks in India
Overview of Top Global Capability Centres Stocks in India
1. Tata Consultancy Services Limited
Tata Consultancy Services Limited company was incorporated in 1968 under the brand Tata Sons. Initially, the company was engaged in providing punched card services to Tata Steel Limited. Later, the company started developing software for IT consultancy firms. And since 1980, the company has been exporting their software. In 2004, the company went public and launched its IPO. Currently, the company is providing their services in more than 150 countries. The company operates a vast network of Global Delivery Centres worldwide to serve its clients. The company has its headquarters in Mumbai.
2. Quess Corp Limited
The company was founded in 2007 by Ajit Isaac. The company is engaged in providing services to multiple verticals of the service sector. Quess Corp Limited became a publicly listed company in 2016. Over time, it has become the largest private sector employer in India and has its operations spread across North America, the Middle East, and Southeast Asia. It helps other companies set up and operate GCCs, and it has entered into strategic partnerships with various international firms. The company’s head office is situated in Bengaluru.
3. L&T Technology Services Limited
The company was incorporated in 2006 as a separate entity of the L&T Group to focus on engineering and research-related activities. The company got itself listed on the Indian Stock Exchange in 2016. The company has made a remarkable presence in the IT service industry by offering digital engineering, Internet of Things, Artificial Intelligence, etc. The company has expanded its global footprint across North America and Europe. Its headquarters are situated in Maharashtra.
4. eClerx Limited
eClerx was founded in 2000 by P.D. Mundhra and Anjan Malik. The company provides data management solutions to various financial institutions. In 2007, the company entered the public market by launching its IPO and became a publicly listed entity. The company currently serves clients of major countries such as the USA, UK, Italy, Germany, etc. Its headquarters are situated in Maharashtra.
5. HCL Technology Limited
The company is a part of HCL Group, which was founded in 1976 by Shiv Nadar. Initially, the company was engaged in developing microprocessors and later entered into providing software services. In 1999, HCL Technologies Limited was incorporated as a separate entity for IT-related services, and in the same year, it became a publicly listed company. Its headquarters are situated in New Delhi.
Key Performance Indicators (KPIs)
| Company | Debt to Equity | ROE (%) | ROCE (%) | Operating Profit Margin (%) | Net Profit Margin (%) |
|---|---|---|---|---|---|
| Tata Consultancy Services Limited | 0 | 51.24 | 62.01 | 25.89 | 19.11 |
| Quess Corp Limited | 0.01 | 4.22 | 17.46 | 1.63 | 0.30 |
| L&T Technology Services Limited | 0 | 20.83 | 27.01 | 16.84 | 11.84 |
| eClerx Limited | 0 | 23.46 | 27.85 | 22.38 | 16.08 |
| HCL Technology Limited | 0.03 | 24.96 | 30.84 | 20.42 | 14.86 |
Read Also: Best Semiconductor Stocks in India
Benefits of Investing in Global Capability Centres Stocks
The key benefits of investing in Global Capability Centres Stocks are as follows:
- Consistent Demand: Due to a rise in demand for cost-efficient capabilities centers the revenue stream of these companies will remain stable.
- Higher Margins: Companies operating as Global Capabilities Centres generally have higher profit margins, because of low operating profit.
- Government Support: As the Indian Government pushes for digital transformation, the growth of companies engaged in Global Capability Centres will be boosted.
Factors to Consider Before Investing in Global Capability Centres Stocks
There are various factors which one should consider before investing in Global Centres Stocks, a few of which are as follows:
- Client Concentration: Numerous companies engaged in Global Capability Centres depend on a very few global clients; if any of their clients end their contract with the companies, it might lead to a reduction in revenue.
- Financial Performance: The company’s key financial metrics, such as operating profit, profit margins, etc., must be checked before making any investment decision.
- Compliances: Global Capabilities Centres store huge amounts of sensitive data. Hence, one must check whether they follow all the regulating guidelines defined by data protection agencies, cybersecurity laws, etc.
Future of Global Capability Centres Stocks
The Global Capability Centres sector has grown at a rate of 10-12% CAGR. Along with this, the industry is expected to reach 100 billion dollars by 2030. Because of a talented workforce and improving technology infrastructure, this sector tends to do exceptionally well in the near future. The Global Capabilities Centres are also shifting from tier 1 to tier 2 and 3 cities to increase the chance of companies in this sector.
Read Also: Top 10 Most Expensive Stocks in India
Conclusion
On a concluding note, in the Global business landscape, India is establishing itself as a prominent player, and Global Capabilities Centres with a skilled workforce help in making its position strong. Companies engaged in GCC offer an opportunity to participate in this growth; however, there are certain risks related to investing in the stocks of these companies. Therefore, one should consult their investment advisor before making any investment decision.
Frequently Asked Questions (FAQs)
What is the Global Capability Centre?
GCCs are units set up by multinational companies to manage business operations, technological support from distant locations such as India.
Which companies are engaged in providing services related to the Global Capability Centre?
There are various IT companies like L&T Technology Services Limited, eClerx Limited, HCL Technology Limited, Quess Corp Limited, TCS, etc.
What are the major risks related to investment in stocks of the Global Capability Centre?
The risk related to investment in stocks of Global Capability Centre includes increasing cost of employees, dependency on clients, global economic slowdown, etc.
What is the future of companies engaged in the Global Capability Centre?
The future of Global Capability Centre companies is very promising as the industry is expected to increase at an annualised rate of 10-11%, which helps them in creating wealth for investors over the long run.
How to invest in companies engaged in providing a Global Capability Centre?
One can easily invest in companies of the Global Capability Centre by opening a lifetime free demat account with Pocketful. And once the account is opened, you can use their mobile application and purchase the Global Capability Centre stocks during market hours.
