India's largest information technology firms sounded more upbeat than the previous earnings season as the companies reported numbers in line with expectations in the first quarter that saw the full impact of the Covid-19 disruption.
Here's how Tata Consultancy Services Ltd., Infosys Ltd., HCL Technologies Ltd. and Wipro Ltd. fared in the quarter ended June:
Infosys was the only one to post a sequential growth in revenue in rupee-terms, buoyed by large new deals signed. TCS, HCL Technologies and Wipro saw a sharp decline because of pandemic-related disruption.
While all four reported operating profit ahead of the street's expectations, Infosys stood out. Its margins improved on the back of operational factors and growth in revenues despite the pandemic.
HCL Tech and Wipro saw the biggest decline in revenue from North America, suggesting that there's still uncertainty about the impact of virus in the region that contributes the most to their revenues. While TCS also witnessed a contraction, Infosys' North America revenue rose.
While the pandemic has had an adverse impact on business of leading global financial institutions, TCS and Infosys continued see to buoyancy in the vertical. But weakness persisted for HCL Technologies and Wipro.
Outlook
Managements of all four IT companies projected gradual improvement, with Infosys and HCL Technologies reintroducing guidance for the ongoing financial year, a practice that was temporarily discontinued at the end of the previous quarter.
- HCL Technologies guided for its revenues to increase by an average of 1.5% to 2.5% in constant currency sequentially for the next three quarters. It projected operating margin to stay between 19.5% and 20.5% in FY21.
- Infosys expects FY21 growth in the range of 0-2% in constant currency, with operating margin in the range of 21-23%.
- Wipro did not release a quarterly guidance. TCS doesn't traditionally provide guidance.
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