TCS vs Infosys vs Wipro vs HCL Tech: Which IT giant outperformed in Q4 results
Upstox
4 min read • Updated: April 29, 2024, 3:21 PM
Summary
IT companies highlighted a challenging environment in FY24 and expressed concerns for the current fiscal year. IT shares have traded on a mixed note after the announcement of quarterly financial results. IT sector shares have seen bouts of buying and selling in the past few weeks after the financial results started coming out.
Financial results for the March quarter by IT companies have been a mixed bag so far. Lower discretionary spending mainly in the key US market and pressure on margins has remained a major concern in the near term. IT companies highlighted a challenging environment in 2023-24 but expressed optimism for the current fiscal.
The latest to release the Q4 results among the Indian IT giants is HCL Technologies Limited.
HCL Tech, in its March quarter results released on Friday, April 26, reported a flat net profit year-on-year while revenue increased 7%.
Here’s a look at the performance of the top Indian IT companies like Tata Consultancy Services (TCS), Infosys, Wipro, LTI Mindtree and HCL Tech.
| Company | Profit growth (YoY) | Rev growth (YoY) | Operating margins | Attrition rate | Dividend |
|---|---|---|---|---|---|
| TCS | 9.1% | 3.5% | 26% Up 150 bps | 12.5% | ₹28/share |
| Infosys | 30% | 1.3% | 20.1% | 12.6% | ₹28/share |
| Wipro | (-) 7.8% | (-) 4.69% | 16.4% Up 40bps | 14.2% | ₹1/share |
| HCL Tech | 0.1% | 7% | 17.6% down 0.5 bps | 12.4% | ₹18/share |
| Tech Mahindra | (-) 41% | (-) 7.14% | 10.9% Down 470bps | 10% | ₹28/share |
Q4 profit numbers- a mixed bag
TCS started the results season for IT pack on April 12. India’s largest IT services company beat street estimates by reporting a 9% growth in consolidated net profit to ₹12,434 crore for the March quarter compared to the year-ago period. Infosys also reported a 30% year-on-year growth in profit to ₹7,970 crore for the last quarter of FY24.
Wipro, however, reported an 8% year-on-year decline in consolidated net profit to ₹2,835 crore. Tech Mahindra also reported a 41% plunge in the March quarter net profit to ₹661 crore.
Revenue growth trails street estimates
Leading IT companies reported weaker-than-expected revenue growth for the March quarter due to a challenging environment. TCS reported a 3.5% year-on-year growth in revenue from operations to ₹61,237 crore for the March quarter as BFSI and consumer segments remained sluggish. Infosys posted a 1.3% YoY growth, the lowest since its inception, in revenue to ₹37,923 crore in the March quarter. Spending cuts by clients hit its growth.
Wipro saw a 4.69% YoY decline in IT services revenue to ₹22,195 crore in the Q4 of FY24. Tech Mahindra also saw a 7.14% Y-o-Y decline in IT services revenue to ₹10,954 crore in the March quarter.
IT companies highlight spending cuts by clients
IT companies termed FY 2023-24 as a challenging year which saw spending cuts by clients due to rising inflation. Wipro stated that FY24 proved to be a challenging year for the industry, and the macroeconomic environment remains uncertain. However companies expressed hope about revival in spending in FY25. Meanwhile, Tech Mahindra stated that it was looking forward to improvement in clients spending, which fuels its optimism for a better revenue performance ahead.
Attrition remains in double digits
Tech Mahindra reported a 480 basis points cut in its attrition rate to 10% in the March quarter, However, other major IT players saw an attrition rate of over 12%.
IT shares trade mixed after Q4 results
IT shares have traded on a mixed note after the announcement of quarterly financial results. TCS has declined by over 4% since the announcement of its results on April 12. Infosys also saw some profit-taking by investors but edged up by 1.3% since April 18 when it released its financial results.
Wipro shares also rose up to 3% after Q4 results while Tech Mahindra surged by around 8% after the announcement of Q4 results.
IT sector shares have seen bouts of buying and selling in the past few weeks after the financial results started coming out. While waning interest rate cut hopes have weighed on IT share sentiment, optimistic outlook by IT companies have supported the uptick in shares.