With
Wipro results hot from the oven, we now have the quarterly results for 4 of the
Top 5 Indian IT firms for the quarter ending December 31, 2013 (Q3, FY14). Now
we have adequate data points and hence a time for reflection and comparative
analysis of the performance of these 4 leading IT firms for this quarter.
Before
we delve into the detailed analysis of the comparative performance of these top
firms, let’s have a quick look at the macro level view in terms of the trends
over the last 8 quarters. If we look at the period between December 2011
and December 2013, Cognizant has grown its quarterly revenues by
41%(estimates), TCS has grown by 33%, HCL by 29%, Infosys by 16% and Wipro by
11%. In the same period Global Majors like Accenture and IBM have grown
by 10% and -8% respectively. In terms of operating margins as a percentage of
revenues TCS has remained almost constant between 29-30% over the last 8
quarters whereas Infosys has come down from 31% to 25%. Wipro has gone up from
20% to 23% over the last 8 quarters, Cognizant has remained constant between
18-19% and HCL has shown a steep increase from 16% to 24%. In a nut shell all
the Indian majors have grown in double digit terms over the last 8 quarters and
all of them are aggressively pursuing margin improvement strategies.
Infosys growth rate which had somewhat stabilized over the last
2 quarters around 3-4% has taken a plunge to 1.7% in this quarter.
However the operating margins as a percentage of revenues have
strongly rebounded to 25% this quarter which indicates some of the strategies
to regain market leadership are now bearing fruit. BFSI remains the leading
vertical with 33.5% of the overall revenue share followed by Retail at 25%. The
overall employee count is 158,000 and overall utilization was at 74%. The
revenues from the Americas region declined by 0.8% sequentially whereas Europe
grew by 5.5%.
TCS has been doing consistently well and has been growing
steadily over the last 8 quarters. The QoQ revenue growth was 4% this quarter
and is lower than the 5.4% growth rate last quarter. Its operating margins as a
% of revenues are hovering around 30% in the last few quarters. BFSI remains
the largest vertical for TCS as well and accounts for 42% of its revenues
followed by Retail at 14%. The overall employee count was 290,000 and
overall utilization was 78% this quarter.
Wipro
seems to be on the path to recovery if
the performance over the last few quarters is looked at. There seem to be green
shoots emerging and it did really well this quarter with a QoQ growth rate of
2.9%. At the same time its operating margin as a percentage of its
revenues has improved to 23% from 20% levels in Q1. BFSI is the largest
vertical at Wipro with 26% of the revenue share followed by Manufacturing at
19%. The overall employee count was 146,000 and overall utilization was 72%
this quarter.
HCL
is the company that has been
showing steady growth over the last few quarters accompanied by a steady
increase in its operating margins. This is a sign of a well-oiled engine whose
operational efficiencies and strategies are joined at the hip. HCL has grown by
4% this quarter and its operating margins as % of revenues have shown a marked
improvement from 16% in Q3, FY12 to 24% in Q3, FY14. Manufacturing is its
biggest vertical with 34% revenue share followed by BFSI at 26%. The overall
employee count was 88,000 and overall utilization was 84% this quarter.
RESULTS
FOR QUARTER ENDING DECEMBER 31, 2013:
The
summary of the Q3, FY14 comparative analysis for Infosys, TCS, Wipro and HCL is
as follows:
1.
HCL leads in terms
of QoQ Revenue growth at 4.0% with TCS following at 3.0%, Wipro closely following
at 2.9% and Infosys trailing at 1.6%
2.
TCS leads in YoY
Revenue growth at 16.6% with HCL following at 14.5%, Infosys at 9.9% and
Wipro trailing at 6.4%
3.
Infosys leads in
terms of QoQ Operating Profits growth at 16.6%, with Wipro following at 5.2%,
HCL at 3.7% and TCS trailing at 1.6%
4.
HCL leads in terms
of YoY Operating Profits growth at 39.4% with TCS following at
27.2%, Wipro at 17.7% and Infosys trailing at 7.1%
5.
TCS leads in terms
of Operating Profits as a % of revenues at 29.8% with Infosys following at 25%,
HCL at 23.7% and Wipro trailing at 23%
6.
TCS leads in
terms of SG&A expenses as a % of revenues at 18.5%, with HCL following at
12.4% and Infosys at 11.1%
Following
is a chart showing the comparative analysis of these top firms on various
financial parameters:
|
Q3, FY14
|
||||
|
Parameter
|
Infosys
|
TCS
|
Wipro
|
HCL
|
|
Q3 Revenues(M USD)
|
2100
|
3438
|
1678.4
|
1321.3
|
|
QoQ
Growth
|
1.6%
|
3.0%
|
2.9%
|
4.0%
|
|
YoY
Growth
|
9.9%
|
16.6%
|
6.4%
|
14.5%
|
|
Q3 Operating Profits(M USD)
|
526
|
1023
|
386
|
313.4
|
|
QoQ
Growth
|
16.6%
|
1.6%
|
5.2%
|
3.7%
|
|
YoY
Growth
|
7.1%
|
27.2%
|
17.7%
|
39.4%
|
|
As
% of Revenues
|
25.0%
|
29.8%
|
23.0%
|
23.7%
|
|
Q3 Net Profits(M USD)
|
463
|
858
|
NA*
|
241.6
|
|
QoQ
Growth
|
20.9%
|
14.7%
|
NA*
|
7.1%
|
|
YoY
Growth
|
6.7%
|
31.6%
|
NA*
|
39.0%
|
|
As
% of Revenues
|
22.0%
|
25.0%
|
NA*
|
18.3%
|
|
Q3 SG&A Expenses
|
233
|
635
|
NA*
|
165
|
|
As
% of Revenues
|
11.1%
|
18.5%
|
NA*
|
12.4%
|
*Wipro
does not give P&L for Global IT services separately. There is a single
P&L for Wipro Limited
I
will be back with more updates once Cognizant comes out with its quarterly
results...
Please do feel free to post in your feedback on my
views…
