┬а
With four of five tier IT companies reporting September quarter results, one thing is clear: While there are visible signs of a demand slowdown, the picture is not all that gloomy.
Infosys performed better than HCL Technologies (HCL Tech), TCS and Wipro, but none of the four stocks could see a sharp upward revision in price targets. This is even as the IT scrip are down up to 47 per cent year-to-date.┬а
Guidance
Infosys announced revision in lower ends of the FY23 revenue and margin forecasts. The IT major narrowed its FY23 constant currency (CC) revenue guidance to 15-16 per cent from 14-16 per cent earlier. It also narrowed its operating margin guidance for the financial year to 21-22 per cent from 21-23 per cent earlier.
HCL Tech, on the other hand, revised upward its FY23 constant currency (CC) revenue guidance to 13.5тАУ14.5 per cent from 12-14 per cent. This IT firm revised EBIT margin guidance to 18тАУ19 per cent from 18-20 per cent earlier. Wipro, which gives quarterly forecasts, guided for $2,811 million-$2,853 million in IT services business revenues. This translates to a sequential growth of 0.5 percent to 2 per cent, less than up to 3 per cent growth analysts anticipated. TCS does not offer guidance.
Profit growth
Infosys led the year-on-year (YoY) profit growth, followed by TCS and HCL Technologies. Wipro performed the worst with a de-growth.┬а
The second-largest software exporter Infosys reported an 11.10 per cent year-on-year (YoY) jump in consolidated net profit at Rs 6,021 crore against Rs 5,421 crore YoY. Its bigger peer TCS clocked an 8.38 per cent YoY rise in bottom line at Rs 10,431 crore against Rs 9,624 crore YoY. HCL Technologies came in third with a 7.05 per cent year-on-year (YoY) rise in profit at Rs 3,489 crore against Rs 3,259 crore YoY. Wipro’s profit fell 9.27 per cent to Rs 2,659 crore against Rs 2,930.70 crore YoY.
Also read:┬аHCL Tech climbs 4% as IT major revises upward its FY23 revenue guidance
Sales growth
In terms of year-on-year (YoY) sales too, Infosys led the pack, with HCL coming in second, TCS third and Wipro fourth.
Infosys’ sales jumped 23.4 per cent to Rs 36,538 crore from Rs 29,602 crore YoY. Revenues in dollar terms stood at $4,555 million, up 1 3.9 per cent YoY (up 2.5 per cent QoQ). Revenue growth in constant currency (CC) terms rose 18.8 per cent YoY (up 4 per cent sequentially).
┬а
HCL’s revenue climbed 19.5 per cent YoY to Rs 24,686 crore from Rs 20,655 crore YoY. Its dollar revenue was up 10.4 per cent 10.4 per cent YoY (up 1.9 per cent QoQ) at $3,082 million. Revenue growth for HCL Tech in constant currency (CC) terms stood at 15.8 per cent YoY (3.8 per cent QoQ).
In case of TCS, revenues advanced 18.01 per cent YoY to Rs 55,309 crore from Rs 46,867 crore. Revenue growth in constant currency (CC) terms stood at 15.4 per cent YoY, TCS said.
Meanwhile, Wipro’s revenues were up 14.60 per cent at Rs 22,539.70 crore against Rs 19,667.40 crore YoY. Dollar revenues for the IT Services stood at $2,797.70 million, up 2.3 per cent sequentially. Revenue growth in constant currency (CC) terms stood at 4.1 per cent sequentially.
Also read:┬аWipro shares give up Rs 400 mark post Q2 earnings, what should investors do?
Ebit margin
In terms of Ebit margin, all of them saw a sequential rise in Ebit margin. TCS’ Ebit margin came in at 24 per cent against 23.10 per cent in June quarter. Infosys saw its operating margin improving to 21.5 per cent from 20.1 per cent QoQ. HCL Tech’s Ebit margin for the quarter came in at 18 per cent against 17 per cent in June quarter and 19 per cent in the year-ago quarter. Meanwhile Wipro also saw a 16 basis points sequential improvement in IT services margin at 15.1 per cent, up 16 basis points sequentially.
Management commentary
TCS’ Chief Executive Officer and Managing Director Rajesh Gopinathan, said demand continued to be very strong. He said his company registered strong, profitable growth across all industry verticals and in all our major markets. Order book is holding up well, with a healthy mix of growth and transformation initiatives, cloud migration and outsourcing engagements, he said.
Infosys CEO and MD Salil Parekh said while concerns around the economic outlook persist, Infosys demand pipeline is strong. HCL’s CEO & Managing Director C Vijayakumar also remained optimistic on bookings and pipeline. Wipro’s CEO and Managing Director Thierry Delaporte cited fall in attrition for the third straight quarter.
“In the second quarter, we promoted more than 10,000 colleagues and increased salaries across bands. We are pleased to report that we recorded a third consecutive quarter of moderation in attrition,тАЭ he said.
Also read:┬аInfosys attrition reduces to 27.1%, hiring drops 52.6% in Q2
Also read:┬аTCS to release variable pay to only 70% of employees in Q2 FY23
