OPEN APP
Home / Companies / News /  TCS  hits  $25 bn  revenue; Infosys  raises guidance
Listen to this article

India’s three leading software services companies—Tata Consultancy Services Ltd (TCS), Infosys Ltd, and Wipro Ltd—kicked off the earnings season on Wednesday, reporting strong revenue numbers for the seasonally weak fiscal third quarter.

The quarter ended 31 December is considered weak for IT firms because of fewer working days in their key markets—the US and Europe.

Infosys outshone its rivals, raising its full-year revenue growth forecast to 19.5-20% in constant currency from the 16.5-17.5% it had predicted earlier, citing strong demand.

“We are in a situation where all the choices we made in the last several years on the digital, cloud and new areas are in resonance with our clients...our execution has been good, and that is what really gave us the confidence to increase our guidance," said Salil Parekh, CEO and managing director of Infosys.

Wipro, which forecasts for the quarter ahead, expects its March quarter revenue to grow in the range of 2-4% in constant currency from the preceding three months, translating to full-year growth of 27-28%. TCS does not give a revenue growth forecast but has indicated an upbeat outlook.

Company results
View Full Image
Company results

TCS’s net profit for the December quarter grew 12.3% from a year ago to 9,769 crore on the back of robust revenue growth of 16.3% to 48,885 crore. Consensus Bloomberg estimates pegged TCS’s profit at 9,980 crore and revenue at 48,533 crore. The Mumbai-based company’s dollar revenue grew 15.4% in constant currency to $6.52 billion. TCS said strong growth over the past four quarters helped it hit the $25 billion mark in revenue on a calendar-year basis. “Our continued growth momentum is a validation of our collaborative, inside-out approach to our customers’ business transformation needs," said Rajesh Gopinathan, CEO and managing director of TCS.

TCS board also approved an up to 18,000 crore share buyback at 4,500 apiece, about 16.6% higher than Wednesday’s closing price of 3,857.25 on BSE

Bengaluru-based Infosys saw its profit grow 11.8% to 5,809 crore on the back of robust revenue growth of nearly 30% to 31,867 crore, above consensus Bloomberg estimates of profit at 5,745 crore and revenue of 30,868 crore.

Wipro’s net profit was little-changed on an annual basis at 2,969 crore even as revenue grew 27.5% to 20,313 crore on broad-based growth. According to a Bloomberg survey, analysts had estimated Wipro’s profit at 3,002 crore and revenue of 20,270 crore.

Driven by growth across sectors, Infosys reported a dollar revenue growth of 7% sequentially in constant currency to $4.25 billion, while Wipro’s dollar revenue grew 3% sequentially in constant currency to $2.64 billion.

“Wipro has delivered a fifth consecutive quarter of strong performance, both on revenue and margins. Order bookings have been strong, too, and we have added seven new customers in the more than $100 million revenue league in the last 12 months. Our strategy and improved execution continue to serve us well, and we are confident of building on this momentum," said Thierry Delaporte, CEO and managing director, Wipro.

Clients are focusing on technology modernization and investing in areas such as cloud computing and digitization, which is boosting demand for IT companies.

However, high attrition rates are a challenge that all three IT companies continue to face.

On a trailing 12-month basis, TCS’s attrition rate was the lowest among its peers at 15.3% in the December quarter, but faster than the 11.9% it reported in the preceding three months. Infosys’s attrition rate accelerated to 25.5% from 20.1% in the second quarter, while Wipro’s increased to 22.7% from 20.5% in the second quarter.

The management of all three companies indicated that supply-side pressure is a trend across the industry and is likely to ease in the fourth quarter.

“Redesigning their organizational strategies to suit the current needs of customers and employees has worked in favour of IT services organizations in the country. As seen in the results, TCS, Wipro and Infosys have continued to grow over the last quarter," said D.D. Mishra, senior director analyst, Gartner.

The companies declared their earnings after market hours on Wednesday. Shares of TCS fell 1.5% to close at 3,857.25 while Infosys closed up 1.16% at 1,877.60 and Wipro closed down 0.4% at 691.35 on BSE.

Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.

Never miss a story! Stay connected and informed with Mint. Download our App Now!!

Close
×
Edit Profile
Get alerts on WhatsApp
My ReadsRedeem a Gift CardLogout