Comparative Analysis of Top 5 Indian IT firms -- Quarter Ending June 30, 2012

Now that CTS has just announced their results for the quarter ending June 30, 2012, its time to take a re-look at the comparative positions of the Top 5 Indian players.

Cognizant has had an amazing quarter with 4.9% sequential QoQ growth (beating its guidance of 4.6%) which puts it in a different league among the Top 5 IT firms. Cognizant has overtaken Infosys and has attained the coveted number 2 position in the Indian IT industry. However it’s Operating Profits as a % of revenues is the lowest amongst the Top 5 players at 18.4% and its SG&A expenses is the highest amongst the Top 5 players.

The Indian IT firms can be classified into two categories:

1.       Category A: CTS and HCL with their very high sequential QoQ growth of 4.9% and 3.1% respectively but at the same time having a much lower Operating Profits as a % of revenues at Sub 20% levels (18.4% and 19.4% respectively)

2.       Category B: TCS, Infosys and Wipro with much lower revenue growth rates of 0.6%, -1.1% and -1.4% respectively but having higher Operating Profits as a % of revenues between 21-29%

The summary of the Q1 performance as per USD GAAP norms for Infosys, TCS, Wipro and HCL is as follows:

1.       CTS leads in terms of QoQ Revenue growth at 4.9%, with HCL following at 3.1% and TCS, Infosys and Wipro trailing  at 0.6%, -1.1% and -1.4% respectively

2.       CTS leads in YoY Revenue growth at 20.9% with HCL following at 12.2% and TCS, Wipro and Infosys trailing at 10.5%, 7.6% and 4.8% respectively

3.       HCL  leads in terms of QoQ Operating Profits growth at 27.4% with CTS following at 4.4% and TCS, Wipro and Infosys trailing at 2.3%, 0% and -7.4%  respectively

4.       HCL leads in terms of YoY Operating Profits growth at 40.3% with CTS following at 22.6% and TCS, Infosys, Wipro trailing at 18.9%, 12.4% and 2.2% respectively

5.       TCS leads in terms of Operating Profits as a % of revenues at 28.2% with Infosys closely following at 27.9% and Wipro, HCL and CTS trailing at 21%, 19.4% and 18.4% respectively

6.       CTS leads in terms of SG&A expenses as a % of revenues at 22.1% with TCS closely following at 19% and HCL, Infosys trailing at 13.2% and 11.6% respectively

Parameter	Infosys	TCS	Wipro	HCL	CTS
Q1 Revenues(M USD)	1752	2664	1514	1079	1795
QoQ Growth	-1.1%	0.6%	-1.4%	3.1%	4.9%
YoY Growth	4.8%	10.5%	7.6%	12.2%	20.9%
Q1 Operating Profits(M USD)	489	750	318	209	331
QoQ Growth	-7.4%	2.3%	0.0%	27.4%	4.4%
YoY Growth	12.4%	18.9%	2.2%	40.3%	22.6%
As % of Revenues	27.9%	28.2%	21.0%	19.4%	18.4%
Q1 Net Profits(M USD)	416	610	NA	155	251
QoQ Growth	-10.2%	4.3%	NA	28.1%	3.3%
YoY Growth	8.3%	13.4%	NA	36.0%	20.6%
As % of Revenues	23.7%	22.9%	NA	14.4%	14.0%
SG&A Expenses	204	507	NA	142	396
As % of Revenues	11.6%	19.0%	NA	13.2%	22.1%

*Wipro does not give P&L for Global IT services separately. There is a single P&L for Wipro Limited