Indian IT Q4 2024: Mixed Bag of Results as Some Shine, Others Tumble

Indian IT companies painted a mixed picture with their Q4 2024 results, released in April. While Tata Consultancy Services (TCS) emerged the clear leader with strong revenue growth and margin stability, HCL Technologies witnessed a significant stock price drop following lower-than-expected profits.

TCS Steals the Show: TCS reported a 1.51% increase in stock price, reflecting positive investor sentiment. The company delivered robust revenue growth and managed to maintain healthy profit margins despite wage hikes. This success could be attributed to TCS's diversified client base and focus on digital services.

TCS registered its highest ever order book Total Contract Value (TCV) of $42.7 billion in FY24 with significant TCV of $13.2 billion for Q4. Full-year revenue reached $29.08 billion, recording a YoY growth of 4.1% (+3.4% CC) propelled by UK (+10.1%) and regional markets (+19.8%). Operating margin remained strong at 24.6%, net margin was at 19.3%, whereas net income surged to $5.62 billion representing a YoY increase of 7.8%.

Infosys Posts Profit Growth, Announces Dividend: Infosys reported a 30% increase in profits, but its stock price experienced a slight decline. The company announced a new capital allocation policy promising an 85% return to shareholders over five years through dividends and buybacks. However, a one-time impact from a renegotiated contract in the financial services segment impacted margins. 

In the Q4 of FY24, Infosys recorded revenues of $4,564 million, maintaining a year-on-year (YoY) flat growth trajectory while experiencing a sequential decline of 2.2% in constant currency terms. The fiscal year 2024 saw a total revenue of $18.6 billion, marking a modest growth of 1.4% in constant currency. Despite the revenue stagnation, the operating margin for the quarter stood at 20.1%, reflecting a marginal sequential decrease of 40 basis points (bps). However, the full fiscal year maintained a robust operating margin of 20.7%, albeit with a slight decline of 0.4% YoY.

HCL Tumbles on Lower Profits: HCL Technologies' stock price took a hit, dropping over 5%. This marks the biggest drop the company has witnessed in over 17 months. The company's profit growth fell short of expectations, raising concerns about its future performance. Analysts pointed to potential challenges in deal wins and increasing competition as factors affecting HCL.

However, C Vijaykumar, CEO and MD, HCLTech remains positive about the results. “HCLTech continues to lead the industry in FY24 with good USD revenue growth of 5.4% YoY during challenging times through our strong commitment to our clients and our people. More importantly, we have translated this growth into even higher value creation for our shareholders with our OCF coming at USS 2,711 Mn, up 21.6% YoY and FCF at US$ 2,584 Mn, up 277% YoY. As we look ahead, global enterprise technology spend will only grow with adoption of Al. We are well positioned to capitalize with our Al led propositions, Global delivery model and ideal mix of technology services and products,” he said,

Wipro Sees Modest Growth: Wipro witnessed a marginal increase in stock price. The company reported decent revenue growth, but margins faced pressure due to wage hikes and a soft sales performance. Wipro's future guidance of flat to 1% growth in dollar sales for the next quarter has caused some caution among investors.

In the latest financial quarter, the company reported gross revenue of ₹222.1 billion ($2.7 billion), maintaining stability quarter-over-quarter. Within the IT services segment, revenue stood at $2,657.4 million, marking a slight 0.1% increase compared to the previous quarter but a 6.4% decline year-over-year. Non-GAAP constant currency IT services segment revenue saw a decrease of 0.3% quarter-over-quarter and 6.6% year-over-year. 

Total bookings amounted to $3.6 billion, with large deal bookings reaching $1.2 billion, showcasing a notable 31.1% increase quarter-over-quarter and 9.5% year-over-year. The IT services operating margin for the quarter improved to 16.4%, rising by 40 basis points quarter-over-quarter. Net income for the quarter reached ₹28.3 billion ($341.0 million), reflecting a 5.2% increase quarter-over-quarter, while earnings per share stood at ₹5.43 ($0.071), also experiencing a 5.2% increase quarter-over-quarter. Operating cash flows reached ₹52.2 billion ($626.1 million), showing a solid 9.0% increase quarter-over-quarter and accounting for 182.6% of net income for the quarter. Voluntary attrition over a trailing 12-month period was reported at 14.2%.