India's six leading software services providers—Tata Consultancy Services Ltd., Infosys Ltd., HCL Technologies Ltd., Tech Mahindra Ltd., Wipro Ltd. and LTIMindtree Ltd.—have reported their earnings for the quarter-ended June.
While Infosys beat estimates, its cross-town rival Wipro underperformed. Here's a closer look at their performance.
How Did The Companies Perform?
Infosys' revenue rose 3.7% quarter-on-quarter even as profit fell, amid a higher base last quarter owing to a one-time gain.
TCS missed its projections for profit marginally.
Tech Mahindra's profit rose 29% sequentially, as the company reported an exceptional loss in the last quarter.
What Cheered The Markets?
Infosys revised its revenue growth guidance for the ongoing financial in constant currency terms, from 1% to 3% to 3%-4%, owing to its acquisition of the engineering research and development provider In-Tech, continued deal momentum and first-quarter earnings. It maintained its operating margin for FY25 at 20-22%.
HCL Technologies maintained its FY25 constant currency revenue growth guidance at 3-5% and operating margin guidance at 18-19%.
Wipro guided for a revenue growth guidance of -1% to +1% for its IT services segment in constant currency terms for the second quarter.
Lower Deal Wins
Four of the top six companies reported a sequential decline in deal wins for the quarter ended June.
The metric stayed nearly unchanged for LTIMindtree and grew 7% QOQ to $534 million for Tech Mahindra. However, each company defines this metric differently, making comparisons difficult.
TCS and Infosys said their order book total contract value rose to an all-time high in the year-ended March 2024.
BFSI Segment Slips
The banking and financial services segment generates maximum revenue for all companies barring Tech Mahindra, for whom its telecommunications vertical is the mainstay.
Revenue from this segment fell over the last quarter for companies, excluding Infosys and Tech Mahindra, in constant currency terms.
Headcount Addition And Attrition
Infosys and HCL Technologies reported a reduction in headcount in the first quarter, while Tech Mahindra and TCS hired more people.
HCLTech reported a one-time impact of divestment in its joint venture with State Street, owing to which its employee reduction was elevated. Excluding this, job losses in the company was at 682.
How Have Shares Performed?
All companies except Wipro and Tech Mahindra have generated positive returns since their earnings, with TCS delivering the most.
While the Nifty IT generated 8% returns since July 4, when results to the Lok Sabha elections were announced, it has outperformed the NSE Nifty 50 by 7 percentage points since then.
What Are Brokerages Saying?
Most brokerages covering the top six IT companies are bullish on TCS and Infosys, with more than 60% of them recommending a 'buy'.
The analysts, while bearish on Wipro and LTIMindtree, have a mixed view on Tech Mahindra, with an almost equal number of analysts having bullish and bearish recommendations.
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