How TCS, Infosys, Wipro, And HCL Tech Fared In Q3
Employees sit working at computers in the library of the TCS campus (Photographer: Dhiraj Singh/Bloomberg) 

How TCS, Infosys, Wipro, And HCL Tech Fared In Q3

India’s four largest information technology companies saw margins improve in the third quarter, aided by a weaker rupee.

While revenue was in line with estimates, Tata Consultancy Services Ltd., Infosys Ltd., and Wipro Ltd. saw subdued demand in their largest financial services vertical. HCL Technologies Ltd. and Infosys were more upbeat on earnings for the full financial year compared to TCS and Wipro.

Here’s how the top software services providers fared in the quarter ended December.

Revenue Growth

HCL Technologies’ growth stood out sequentially and year-on-year, driven by products it acquired from International Business Machines Corp. last year. All four reported revenues in line with expectations.

Operating Margins

Margins expanded sequentially as the rupee depreciated. A weaker rupee helps as the software services exporters bill clients in dollars.

Margins dipped over a year earlier for all except HCL Tech, for which margins defied expectations of contraction because of its strength in its products business. TCS surprised with 100 basis points sequential expansion that, according to its management, was aided by cost efficiencies and investments in skilling employees in new technologies.


  • TCS said it is optimistic about 8 percent revenue growth in FY20. It remained hopeful about achieving operating margins within 26 to 28 percent.
  • HCL Technologies increased not only its revenue guidance for FY20 to 16.5-17 percent from 15-17 percent but also operating margins guidance to 19-19.5 percent from 18.5-19.5 percent.
  • Infosys hiked its FY20 revenue guidance to 10-10.5 percent from 9-10 percent on expected lines. The company maintained its operating margin guidance range of 21-23 percent for the full fiscal.
  • Wipro predicted IT services revenue to grow 0-2 percent sequentially in ongoing quarter ending March.

Banking Financial Services and Insurance

All managements raised concerns over their largest vertical. The vertical was subdued for TCS and Infosys year-on-year. HCL Technologies, however, saw robust growth aided by the business brought from IBM. Wipro continued to struggle, reporting the lowest growth among peers.

Key Geography

TCS struggled the most in North America because of subdued demand from BFSI and retail clients. Infosys and HCL Technologies reported double-digit growth.

Valuations, Analyst Ratings

HCL Technologies has the highest ratings and the lowest price-to-earnings multiple, according to average of estimates tracked by Bloomberg. None of the companies, however, are expected to return more than 9 percent gains in the next 12 months.

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