Infosys vs TCS: Comparison of Q4 results of IT companies

Both Infosys And TCS, which comprises 11 per cent of the Nifty 50 index weighting, missed analysts’ estimates in quarterly profit as companies reduced spending on tech to cool the economy following turmoil in the US banking sector.

Net Profit

TCS: net profit on TCS grew to 11,392 crore from January to March, an increase of 14.8 per cent over the same period last year. analysts estimate 11,530 crores on an average.

Infosys: The company posted a net profit of 6,128 crore, an increase of 7.8 per cent over the previous year. Analysts expected profit of 6,613 crores.

Income

TCS: The Mumbai-headquartered firm’s operations brought in revenue 59,160 crore, an annual growth of 16.9 per cent.

Infosys: Revenue growth in constant currency for FY23 came in at 15.4 per cent, below guidance. Specifically, during the December quarter Income Ahead of the announcement, Infosys – which competes in the market with TCS, Wipro and other IT firms – had raised FY23 revenue guidance to 16-16.5 per cent (against the earlier estimated band of 15-16 per cent).

Revenue grew by 16 percent in Q4 FY23 37,441 crore but represented a decline of 2.3 per cent as compared to the December 2022 quarter.

The IT services major expects revenue growth of between 4 per cent and 7 per cent for the current fiscal year ending March 2024, which is below analyst expectations.

up and down figures

TCS: The company was able to register double digit growth in topline and bottom in Q4FY23. Both the top and bottom figures were lower than Street estimates. Its outgoing CEO Rajesh Gopinathan acknowledged that revenue growth of 0.6 per cent in the December quarter was “weaker than expected” due to a shock in North America.

Infosys: The company missed analysts’ estimates for both the bottomline and topline.

deal wins

TCS: Despite growing economic challenges, Mumbai-based TCS has won some big contracts in recent months, including a deal worth more than $700 million with an insurance service provider, the biggest in the UK in three years.

Its January-March order book stood at $10 billion, down 11.5 percent from a year earlier but with an “all-time high number of large deals”.

Infosys: Infosys’ big deal was $2.1 billion in total contract value in the three months to March.

Dividend

TCS: The board approved the final dividend of 24 per equity share.

Infosys: Board has recommended final dividend 17.50 per equity share for the financial year ending March 31, 2023.

headcount, attrition

TCS: During the March quarter, TCS reverted to its historic trend of becoming a net hirer, adding 821 employees to take the total headcount to 6.15 lakh people.

Employee attrition, a key metric for IT companies, rose to 20.1 per cent from 15.3 per cent in the previous quarter.

Chief HR Officer Milind Lakkad said the company is maintaining the 40,000 freshers-hire target for FY24 and has already made 46,000 offers. Pay revision will be as usual, and top performers will get a hike of 12-15 per cent, he said.

Infosys: The March 2023 quarter saw a net reduction of 3,611 employees in Infosys’ head count as compared to the previous quarter, taking the total workforce to 3,43,234 by March 31, 2023.

Infosys’ voluntary exits – a metric keenly watched by analysts – showed improvement, easing concerns. The attrition rate in the fourth quarter of FY2023 stood at 20.9 percent, compared to 24.3 percent in the third quarter.

what does bloomberg intelligence say

TCS: Anurag Rana, Senior Analyst said: “Tata Consultancy Services’ (TCS) financial 4Q23 results may highlight increased client demand for cost rationalization as various industries grapple with the prospect of a near-term slowdown.”

Infosys: Rana said: “Software companies have already seen a reduction in demand from enterprise customers and Infosys may see a similar drag. However, we expect the company to grow faster than most of its peers given its large digital footprint.”

shares

TCS shares closed down 1.53 per cent. 3,192.00 per scrip in Mumbai trading on Thursday, while Infosys shares closed down 3.14 per cent after the earnings announcement. 1,383.40 ahead of each Q4 number.