With TCS announcing the results today evening for the quarter ending September 30’th, 2012, I have adequate data points from the 3 of the Top 5 Indian firms (Infosys, TCS and HCL) for a comparative analysis for Q2, FY13. As always, I am looking at the quarterly results in USD as per IFRS norms as this is the only way we can get to compare ‘apples to apples’. Like always I am sharing my analysis here as the media usually presents a medley of USD and INR results and one does not usually get a correct financial comparison of the leading IT firms.
“The Economist” in its latest forecast talks about the three forces shaping the global economy viz. whether the latest policies in Europe will help to save the euro; whether lawmakers can steer the US economy away from the "fiscal cliff" that looms in early 2013; and whether China's response to its economic slowdown will succeed. On all three fronts, the magazine believes that favorable outcomes are likely. The growth forecast for the US and the rest of the world for 2013 has been revised upwards which is a very good sign for the Top 5 Indian IT companies.
Infosys seems to be on the recovery wave based on the results posted this quarter (Q2, FY13). It has grown QoQ by 2.6% and YoY by 2.9% in terms of its revenues for the quarter ending 30th September, 2012. This is certainly a big welcome change from the last few quarters where the revenues fell sequentially for 2 quarters. The most refreshing aspect is that all the 4 verticals at Infosys have posted growth this quarter.
HCL has been going strong for the last few quarters and has posted a QoQ growth of 3.1% last quarter and 3.2% this quarter. More specifically it is showing a strong and consistent YoY growth in the range of 11-12% both in Q1 and Q2, FY13. It has also shown a whopping YoY growth in Operating margins to the tune of 51%. In contrast, Infosys has shown a decrease in its operating margins by around 3.7% YoY in this quarter. For the first time in the last several quarters Infosys allowed its Operating margins as a % of its revenues to fall below the ‘Infosys Gold Standard’ of 28%. This is what the analysts and media always wanted. Isn’t it?
TCS which has had a good QoQ growth of 3.0% in Q1, FY13 has shown an excellent and consistent growth in the quarter ending 30’th September, by 4.6% on a QoQ basis and 13% on a YoY basis. It has steadfastly held its operating margins as a % of revenues at 26-28% mark over the quarters. The volume growth of TCS in Q2, FY13 is 5%.
The summary of the Q2 performance analysis for Infosys, TCS and HCL are as follows:
1. TCS leads in terms of QoQ Revenue growth at 4.6%, with HCL following at 3.2% and Infosys trailing at 2.6%
2. TCS leads in YoY Revenue growth at 13.0% with HCL following at 11.1% and Infosys trailing at 2.9%
3. HCL leads in terms of QoQ Operating Profits growth at 3.3% with TCS following at 1.7% and Infosys trailing at -3.5%
4. HCL leads in terms of YoY Operating Profits growth at 51.0% with TCS following at 11.5% and Infosys trailing at -3.7%
5. TCS leads in terms of Operating Profits as a % of revenues at 26.7% with Infosys closely following at 26.3% and HCL trailing at 19.4%
6. TCS leads in terms of SG&A expenses as a % of revenues at 18.6% with HCL following at 13.0% and Infosys trailing at 11.7%
Following is the chart showing the comparative analysis of these top firms on various financial parameters:
Q2, FY13
| | | |
Parameter
|
Infosys
|
TCS
|
HCL
|
Q2 Revenues(M USD)
|
1797
|
2853
|
1113
|
QoQ Growth
|
2.6%
|
4.6%
|
3.2%
|
YoY Growth
|
2.9%
|
13.0%
|
11.1%
|
Q2 Operating Profits(M USD)
|
472
|
763
|
216
|
QoQ Growth
|
-3.5%
|
1.7%
|
3.3%
|
YoY Growth
|
-3.7%
|
11.5%
|
51.0%
|
As % of Revenues
|
26.3%
|
26.7%
|
19.4%
|
Q2 Net Profits(M USD)
|
431
|
643
|
162
|
QoQ Growth
|
3.6%
|
6.5%
|
3.8%
|
YoY Growth
|
4.9%
|
21.8%
|
51.4%
|
As % of Revenues
|
24.0%
|
22.5%
|
14.6%
|
SG&A Expenses
|
211
|
531
|
145
|
As % of Revenues
|
11.7%
|
18.6%
|
13.0%
|
Please feel free to send in your valuable feedback/comments on my analysis…
