IT Giants: A Mixed Bag of Performance

The announcement of Q1 FY25 results for India’s leading IT companies, Wipro, Infosys, Tata Consultancy Services (TCS), and HCL Technologies, presents a varied picture of performance and future prospects. While TCS, Infosys, and HCL Technologies have exceeded market expectations, Wipro has struggled, delivering the weakest numbers among the major IT firms. This article delves into the key highlights, financial metrics, and future guidance of these tech giants, providing a comprehensive overview of their quarterly performance.

Wipro’s Q1 FY25 Performance

Wipro reported a 4.6% year-on-year (YoY) increase in its net profit for Q1 FY25, reaching ₹3,003 crore, surpassing market expectations. However, the company’s consolidated revenue for April-June fell by 3.8% to ₹21,964 crore. The company has forecasted sequential revenue growth in the range of -1% to 1% in constant currency (CC) terms, following a reduction in guidance last quarter to -1.5% to 0.5%.

Revenue Breakdown

Geographic Revenue Distribution

Despite the overall decline, Wipro’s net income for the quarter stood at ₹30 billion, up by 4.6% YoY. The company’s large deals Total Contract Value (TCV) for the quarter was $1.2 billion, down 3.6% YoY, while total bookings for the quarter were $3,284 million.

Infosys’ Strong Quarter

Infosys reported a 7.1% YoY increase in its net profit at ₹6,368 crore for Q1 FY25, surpassing the consensus Bloomberg estimate of ₹6,248 crore. Revenue for the quarter grew by 3.6% YoY to ₹39,315 crore, also exceeding market expectations.

Revenue and Profit Growth

Infosys raised its revenue growth guidance for FY25 from 1-3% to 3-4% in CC terms, signalling improved IT expenditure by clients.

Revenue Contribution by Region

Infosys’ voluntary attrition rate improved to 12.7% in Q1 FY25, down from 17.3% in Q1 FY24. The company added 87 new clients in the quarter, with the highest-ever large deal wins at 34, totalling a TCV of $4.1 billion.

TCS: Signs of Revival

Tata Consultancy Services (TCS) reported an 8.7% YoY rise in net profit at ₹12,040 crore for Q1 FY25. Revenue from operations increased by 2.24% YoY to ₹62,613 crore.

Key Financial Metrics

TCS’ growth across all verticals, excluding telecom, coupled with net hiring at a seven-quarter high, indicates early signs of revival. The company announced a dividend of ₹10 per share, with the record date set for July 7 and payment date on August 5.

Conclusion

The quarterly results of India’s leading IT companies highlight a mixed performance. While Infosys and TCS have shown strong numbers and promising outlooks, Wipro has struggled. Investors and market watchers will be keenly observing the next quarters for signs of recovery and sustained growth in the IT sector. The performance of these companies underscores the dynamic and competitive nature of the IT industry, influenced by global economic conditions, client expenditure patterns, and strategic business decisions.

Market this week

• The Indian market continued to make fresh record highs in the truncated week ended July 19, driven by positive global cues, strong economic data, a good start to the earnings season, and improved monsoon progress.
• Despite the overall positive trend, the market ended the week with minor gains, influenced by profit booking on Friday ahead of the budget due next week.
• Sectorally, the Nifty Media index shed 5.3%, the Nifty Metal index was down 4.6%, and the Nifty Energy index fell nearly 2%.
• In contrast, the Nifty Information Technology and FMCG indices each added 2%.
• Foreign institutional investors (FIIs) extended their buying spree, purchasing equities worth ₹10,945.98 crore during the week.
• Meanwhile, Domestic Institutional Investors (DII) turned net sellers, offloading equities worth ₹4,226.29 crore.

Weekly Leaderboard

Stocks that made the news this week:

• Kotak Mahindra Bank reported a net profit of ₹6,250 crore for the April-June quarter of FY25, marking an 81% increase from ₹3,452 crore in the same quarter last year. This surge included a ₹3,012 crore boost from the bank’s stake sale in Kotak General Insurance to Zurich Insurance Group. Excluding this sale, the net profit was ₹4,435 crore. The bank’s net interest income rose 10% to ₹6,842 crore from ₹6,234 crore last year, slightly below the ₹7,087 crore expected by brokerages.

• RBL Bank reported a net profit of ₹372 crore for the April-June quarter of FY25, a 29% increase from ₹288 crore in the same quarter last year. The lender’s gross non-performing assets (GNPA) improved to 2.69% from 3.22% last year, while net non-performing assets (NNPA) stood at 0.74% compared to 1%. Net interest income rose 20% to ₹1,700 crore. Total deposits grew 18% year-on-year to ₹1.01 lakh crore, with a CASA ratio of 32.6%. Deposits under ₹3 crore saw a 25% year-on-year and 5% quarter-on-quarter increase, reaching ₹49,980 crore, making up 49.3% of total deposits.

• Reliance Industries, encompassing oil, telecom, and retail sectors, showcased resilient financial performance in Q1 FY25, ending June 30. The company’s consolidated EBITDA rose by 2% year-on-year to ₹42,748 crore, driven by robust contributions from its oil & gas and consumer businesses, which offset the weaker performance in the oil-to-chemical (O2C) segment.