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TCS, Infosys, Wipro Q3 Earnings Review: HDFC Securities

TCS, Infosys, Wipro Q3 Earnings Review: HDFC Securities

<div class="paragraphs"><p>Attendees working on laptop computers. (Photographer Victor J. Blue/Bloomberg)</p></div>
Attendees working on laptop computers. (Photographer Victor J. Blue/Bloomberg)

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HDFC Securities Report

Tata Consultancy Services Ltd. reported in-line revenue performance, while the margin was a miss. The deal total contract value continues to be strong, driven by banking, financial services and insurance and North America. We expect TCS’ growth to be steady, supported by-

  1. healthy demand environment, owing to cloud adoption;

  2. growth opportunity for Horizon-2 services, which includes artificial intelligence/analytics and security;

  3. improvement in client addition; and

  4. better alignment with fast-growing hyperscaler ecosystem (Azure, AWS, and GCP).

Infosys Ltd.'s revenue growth guidance for FY22E was upgraded to 19.5-20% constant currency and the Ebit margin band remains unchanged at 22-24%. Infosys’ growth trajectory remains robust, supported by-

  1. a strong deal pipeline and wins – it closed 25 large deals with TCV of 2.5 billion up 17% QoQ;

  2. broad-based momentum across verticals, BFSI (five large deals in Q3), retail, manufacturing, life-science and communication;

  3. operational pivots of offshoring and utilisation mitigating the near-term impact from higher sub-contracting

Wipro Ltd. delivered a muted performance in Q3; growth of 3.0% QoQ constant currency was below estimate and the lowest in the last five quarters. The organic growth at ~2% QoQ was the lowest among top-three IT. The guidance of 2-4% QoQ growth is in-line with our estimate but includes inorganic component of ~40 bps. Wipro organic growth engine has revived significantly in FY22E (~16% YoY) versus historical average of low single digit growth.

Click on the attachment to read the full report:

HDFC Securities - Q3FY22 Result Review - TCS, Infosys, Wipro.pdf

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