The September quarter proved
that Infosys is well on track to regain its old glory while TCS
slipped. Wipro had a mixed bag to report while HCL showed continued
weakness. However, none of them are not shying away from making
investments in technology areas such as automation, digital to keep
themselves ready for the future
These multi-billion dollar firms also remain focused on the opportunities like digital, which are driven by technologies like automation, use of software solutions and creating technology platforms. They believe that this is a phase of transition and are putting their faith in investments for the future.
Infosys, for second time in a row outperformed the market expectations with a 6% sequential revenue growth in US dollars and a rise in net profit of 9.1%. This performance was driven by all-round growth across verticals, geographies with tighter controls on costs, despite the impact from cross-currency fluctuations. However, its muted outlook for the remainder of the fiscal, tempered down the momentum. TCS reported a 3% sequential rise in dollar revenue which was a shade below the market expectations but the bigger worry has been that it has not been able to meet the projections in the last four quarters. TCS is maintaining its operating profit margin level with a strong volume growth and there is an expectation that it would soon regain the old momentum of high growth.
Wipro’s performance was in line with market expectations with 2.1% sequential revenue growth in US dollars but its OPM took a hit due to wage hikes and currency fluctuations. However, its revenue guidance for the current quarter in the range of 0.5-2.5% brought down the expectations as it has traditionally put in a strong performance during this period.
The big disappointment during the quarter was from HCL Technologies which recorded flattish growth in revenue and a 5.4% sequential fall in net profit. The IT major had earlier warned of a revenue dip and profit warning guidance citing certain client specific challenges and a slow transition in its key infrastructure services projects. The worrying factor for the analysts has been its inability to make a smooth transition of its significantly large order book into steady revenues.
TCS reported a sedate set of numbers with net profit up 3.2% sequentially to $926 million while revenues rose 3% to $4.16 billion. In rupee terms, the revenue stood at R27,165 crore recording a sequential growth of 5.8% while the net profit rose 6.5% to R6,085 crore.
TCS reported a strong operating margins of 27.1% and reported a volume growth of 4.9%. The IT major’s order book during the quarter had been the highest ever and 30% bigger than in the previous-highest quarter. It added three customers with revenues of $100-million-plus and six customers with revenues of $10-million-plus. TCS added 25,186 employees during the quarter and the company now employs 3.35 lakh people.
TCS MD and CEO N Chandrasekaran said, “We remain focused on partnering with clients in multiple business
dimensions to help them strategise and execute their digital roadmaps. Given the growing market adoption of Digital, we continue to take new IP-led products and platforms to market successfully as well as invest in training our talent.”
Infosys
India’s second largest IT services exporter, Infosys reported a 9.1% rise in net profit on a sequential basis in US dollar terms and a revenue growth of 6% for the second quarter of FY16. The net profit at $519 million at the end of second quarter was boosted by forex gains, lower visas charges and an overall control on costs. The revenues of Infosys during the second quarter stood at $2.39 billion, which was the highest sequential growth in the last 16 quarters.
In rupee terms, the revenue stood at Rs 15,635 crore recording a sequential growth of 8.9% while the net profit grew by 12.1% to Rs 3,398 crore. During the second quarter, the operating profit margins (OPM) of Infosys rose by 150 basis points on a sequential basis to end at 25.5% as compared to 24% in the comparable previous quarter. However, these upbeat numbers were tempered down with the IT major lowering its annual revenue guidance on a commentary of a challenging business environment in the second half of the fiscal and the resignation of the CFO.
Infosys CEO Vishal Sikka said, “We are experiencing a once-in-a-generation opportunity for services company to help businesses maximise their potential with technology. While results in any one quarter are transitory snapshots of a long journey we do see our focused execution along our strategy starting to produce encouraging results
for our clients, shareholders and Infoscions.”
Wipro
India’s third largest IT services exporter, Wipro reported a 2.2% sequential increase in net profit for the second quarter of FY16 boosted by gains of higher productivity and better pricing power. This rise in net profit came in despite the impact of cross-currency movement and wage hikes.
Wipro’s IT services revenue increased by 4% on a sequential basis to touch R12,042.8 crore at the end of the second quarter driven largely by all round growth across verticals and the ability to win the large sized deals. The IT services revenues in dollar terms was $1831.9 million, showing a sequential growth 2.1% and it was line with its guidance of 1.5-3.5%. The operating profit margins (OPM) of Wipro stood at 20.7%, which was down by 30 basis points when
compared to the previous quarter impacted largely by cross-currency movement and wage hikes.
For the third quarter of the fiscal, Wipro has given a revenue growth guidance in the range of 0.5-2.5% in US dollar terms. Terming the second quarter performance as a period of all-round growth, Wipro CEO TK Kurien said, “As we look forward, we are seeing a stable demand environment. We continue to see strong competition around large deals and there is pressure on pricing with respect to new deals. We aspire to achieve a H2 that is better than H1.”
HCL
India’s fourth largest IT services exporter, HCL Technologies reported a 5.4% sequential decline in net profit in US dollar terms for the quarter ending September, 2015 weighed down by cross-currency volatility, client specific issue and a slowing revenue growth in certain verticals.
The net profit at the end of the quarter stood at $264 million, after taking into account the provision for a one-time payment of $15 million. The revenue at the end of the quarter stood at $1.54 billion which was almost flattish sequential growth of 0.5%. The operating profit margins (OPM) improved by 60 basis points to 21.9%. The net profit in rupee terms stood at R1,726 crore which was a decline of 3.2% on a sequential basis while revenue grew 3.3% to reach Rs 10,097 crore.
HCL Technologies president & CEO Anant Gupta said, “We have started FY16 on a strong footing with LTM revenue growth of 15% YoY in constant currency. Our investments in BEYONDigital, Next-Gen ITO and IoT offerings is reflected in our healthy bookings and deal pipeline and continues to demonstrate our ability to incubate blue ocean ideas and build them to be market leaders.”
Driven by great execution on the ground, our broad-based performance has been led by strong sequential growth in BFS, retail and life sciences verticals with UK and North America leading the markets” – N CHANDRASEKARAN,
CEO & MD, TCS
As we look forward, we are seeing a stable demand environment. We continue to see strong competition around large deals and there is pressure on pricing with respect to new deals. We aspire to achieve a H2 that is better than H1.” – TK KURIEN, Member of the Board & CEO, Wipro
Our investments in BEYONDigital, Next-Gen ITO and IoT offerings is reflected in our healthy bookings and deal pipeline and continues to demonstrate our ability to incubate blue ocean ideas and build them to be market leaders” – ANANT GUPTA, President & CEO, HCL Technologies
CEO & MD, Infosys
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