TCS Beats companion In Q2 On Easing Supply Constraints and Deal Wins

India’s four biggest information technology companies witnessed an improvement in margin and revenue within the quarter ended September as new deals and digital infrastructure offset the disruptions caused by the coronavirus pandemic. Tata Consultancy Services Ltd., the nation’s largest software services exporter, stayed before peers on most parameters. Here’s how TCS, Infosys Ltd., HCL Technologies Ltd. and Wipro Ltd. fared within the July-September period:

Operating Margin

The Indian IT firms saw their margin expand within the second quarter on better absorption of fixed costs, increase in utilisation rates and lower travel expenses as most employees worked from home. That offset the headwinds from the rupee appreciation during the amount . Among all, TCS stood out.

Revenue

Revenue of the software services exporters rebounded from the pandemic-marred quarter ended June as supply-side constraints eased and on build up of huge deals. The revenue beat estimates in constant currency terms also . And TCS surpassed peers once more .
Deal Wins TCS reported the very best deal wins among peers at $8.6 billion during the three months ended September. Infosys reported total contract value at $3.15 billion. HCL Tech reported 15 deals but didn’t report the worth . Wipro, too, said it’s witnessed “strong momentum” without disclosing any details.

Financial Services

The most important vertical for IT companies saw deals devour pace as lockdown curbs were eased and focus shifted on digital transformation. TCS topped the pack, while Wipro, Infosys and HCL Tech still see buoyancy within the vertical.

Guidance

Wipro resumed its quarterly guidance, and expects IT services revenue growth of 1.5-3.5% on a sequential basis for the quarter ended December. Infosys raised its revenue growth guidance in constant currency for fiscal ending March 2021 to 2-3% from 0-2% earlier, which of operating margin to 23-24% from 21-23%. HCL Tech maintained its revenue guidance for subsequent two quarters and 2020- at 1.5-2.5% in constant currency, but hiked its operating margin guidance to 20-21% for an equivalent period from 19.5%-20.5% forecast earlier. TCS doesn’t traditionally provide guidance. Mohit Sharma, analyst at Motilal Oswal Securties, said despite potential wage hikes expected within the last half of 2020-21, Indian IT companies have increased their revenue and margin guidance. That, Sharma said during a note, indicates their ability to sustain some margin improvement spurred by demand for digital services, especially within the cloud.

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