While large IT companies showed a mixed performance in the fourth quarter of FY23, midcap IT companies in the likes of Persistent System, L&T Tech, and Cyient reported better performance, mostly meeting their estimates on the back of steady order pipeline. Three out of the five large-cap companies saw a decline in their revenues this quarter. TCS posted revenue at Rs 59,162 crore, HCL Tech reported fourth quarter revenue of Rs 26,606, Wipro\u2019s revenue from operations stood at Rs 23,190.3 crore, Tech Mahindra posted revenue at Rs 13,718 crore, Infosys posted its fourth quarter revenue at Rs 37,441 crore, and LTI Mindtree\u2019s revenue for the quarter stood at Rs 8691 crore. <\/p>\n
\u201cLarge IT companies\u2019 performance was mixed in Q4FY23, TCS, HCL Tech and Wipro reported inline sets of numbers and Infosys, Tech Mahindra and LTI Mindtree disappointed the street,\u201d said Deepak Jasani, Head of Retail Research, HDFC Securities. However, he added, \u201cgrowth in client acquisition, and increasing deal size, supported mid cap IT companies like Persistent System, L&T Tech, and Cyient to derive revenue. However, rise in employee cost and supply-side constraints could create challenges to these companies\u2019 profitability growth in the near to medium-term.\u201d<\/p>\n
\u201cThere were multiple large, long-tenured deals, with a majority of them in digital transformation, cloud, application development and AI. Infosys (4), TCS (3) and IBM (3) were the most active players,\u201d said Kumar Rakesh, Analyst \u2013 IT & Auto, BNP Paribas India. Among major acquisitions, he added, were \u201cAccenture\u2019s acquisition of a business consulting company specialising in SAP technologies and capabilities, Globant acquisition of a digital transformation consultancy in the US with expertise in healthcare and IBM acquisition of a SaaS-based provider of an open source, distributed SQL query engine\u201d.<\/p>\n
According to analysts and brokerage firms, mid cap companies have provided more optimistic revenue guidance than their large cap counterparts. Midcap companies are recording double-digit revenue growth. Persistent Systems saw its revenue rise 3.92 per cent over the previous quarter to Rs 2,254.47 crore. Cyient reported a revenue for the quarter at Rs 1,751.40 crore. Coforge posted a revenue at Rs 2,170 crore. \u201cMid-tier companies had a mixed showing, with some exceeding expectations and others missing it. The slowdown was led by the US markets and certain verticals such as financial services, hi-tech and communications, said Kotak Institutional Equities. <\/p>\n
While the midcap firms performed better, will it continue in the next quarter? \u201cFirstly, the demand has slowed down and is broad-based, evidenced from results of all tier-I and even emerging companies such as LTI Mindtree and Mphasis. The fact that Persistent and Coforge performed well means they are outliers rather than the norm. The slowdown is broad-based and for real,\u201d said Kotak Institutional Equities. Also, analysts opined that there has been a lacklustre margin performance across the board, whether in large-cap or mid-cap companies. <\/p>\n
Outlook for next quarter<\/p>\n
Mid-tier companies had a mixed showing, with some exceeding expectations and others missing it. The slowdown in January which led to projects being paused or cancelled in February and March has also clouded the outlook for the next quarter. \u201cThe banking crisis in US regional banks and European banks in March 2023 has induced greater caution and will impact the June 2023 quarter,\u201d added Kotak Institutional Equities. <\/p>\n
Except Infosys, the brokerage firm said, the June quarter could be weaker than the March quarter for many companies. \u201cWe attribute the weakness to project pauses and cancellations in North America and select verticals such as banking and communications.\u201d According to the analysts, large cap companies are expected to outperform mid-caps in the next quarter.<\/p>\n","protected":false},"excerpt":{"rendered":"
While large IT companies showed a mixed performance in the fourth quarter of FY23, midcap IT companies in the likes of Persistent System, L&T Tech, and Cyient reported better performance, mostly meeting their estimates on the back of steady order pipeline. Three out of the five large-cap companies saw a decline in their revenues this quarter. TCS posted revenue at Rs 59,162 crore, HCL Tech reported fourth quarter revenue of Rs 26,606, Wipro\u2019s revenue from operations stood at Rs 23,190.3 crore, Tech Mahindra posted revenue at Rs 13,718 crore, Infosys posted its fourth quarter revenue at Rs 37,441 crore, and […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7],"tags":[],"class_list":["post-800144","post","type-post","status-publish","format-standard","hentry","category-it-2"],"acf":[],"_links":{"self":[{"href":"https:\/\/telecomlive.in\/web\/wp-json\/wp\/v2\/posts\/800144","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/telecomlive.in\/web\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/telecomlive.in\/web\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/telecomlive.in\/web\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/telecomlive.in\/web\/wp-json\/wp\/v2\/comments?post=800144"}],"version-history":[{"count":0,"href":"https:\/\/telecomlive.in\/web\/wp-json\/wp\/v2\/posts\/800144\/revisions"}],"wp:attachment":[{"href":"https:\/\/telecomlive.in\/web\/wp-json\/wp\/v2\/media?parent=800144"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/telecomlive.in\/web\/wp-json\/wp\/v2\/categories?post=800144"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/telecomlive.in\/web\/wp-json\/wp\/v2\/tags?post=800144"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}