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Business News/ Companies / News/  Coforge, Cyient outliers amid weak quarter for tech services
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Coforge, Cyient outliers amid weak quarter for tech services

While bellwether large-caps, as well as mid-cap firms such as Larsen & Toubro Technology Services, Persistent Systems and Zensar Technologies, largely offered bleak September quarter figures, both Coforge and Cyient group outperformed peers in maintaining operating margin and profitability.

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NEW DELHI:Mid-cap information technology (IT) service providers, Cofo-rge and Cyient Group, proved outliers in their September quarter earnings filed at the BSE on Thursday. While bellwether large-caps, as well as mid-cap firms such as Larsen & Toubro Technology Services (LTTS), Persistent Systems and Zensar Technologies, largely offered bleak September quarter figures and cautious commentary for the rest of this fiscal, both Coforge and Cyient group outperformed peers in maintaining operating margin and profitability—despite macroeconomic headwinds.

Cyient reported September quarter revenue of $214.9 million for the entire group—up 4.6% sequentially and 22.3% year-on-year (YoY) in constant currency. Operating margin for the group also expanded—up 40 basis points (bps) to 16.5% for the quarter. Net profit also rose by 1.5% sequentially to 172.8 crore—which the company hierarchy attributed to strong growth in automotive, sustainability and transportation verticals.

Coforge, meanwhile, reported 2.3% sequential growth in its dollar revenue—up to $278.1 million for the September quarter. Consolidated profit for the quarter rose 9.5% sequentially—up to 181 crore in the quarter.

More importantly, Coforge and Cyient retained their guidances and targets for FY24.

Sudhir Singh, chief executive of Coforge, said in a press statement that the company will retain its FY24 revenue growth guidance of 13-16%, as well as its 50bps margin expansion target.

The midcap firms outperformed their larger peers by a substantial margin. Tata Consultancy Services (TCS), India’s largest IT services firm, missed Street estimates in reporting a 0.3% sequential revenue drop. Infosys and HCL Technologies, meanwhile, slashed their revenue growth guidance by 1 and 2 percentage points respectively off the back of a weak first half of the year. Wipro, the final of India’s top four IT services firms, reported a third straight quarter of sequential revenue drop. Worryingly, it also projected a further revenue degrowth for the December quarter, with a guidance of a decline of 1.5-3.5% in quarterly revenue in the ongoing quarter.

Fellow mid-cap firm LTTS slashed its operating margin by 2.5 percentage points during the September quarter, while Happiest Minds, which also reported its earnings earlier this week, halved its FY24 revenue growth guidance—down to 12% now from a previous projection of 25%.

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ABOUT THE AUTHOR
Shouvik Das
Shouvik Das reports on AI, gaming, IT services, science, space and technology policy for Mint. He also writes on consumer technologies and tech-driven cultural experiences for Lounge, Mint's weekend supplement. Every week, he hosts an irreverent weekly podcast, Techcetra. Beyond work, he is passionate about food, music, sports and travel, and is also a hobbyist photographer.
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Published: 19 Oct 2023, 10:18 PM IST
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