HCLTech outshines peers on Q3 results, Wipro reports decline

Bengaluru: It was a mixed bag of numbers for the Indian IT sector on Friday as IT services giants Wipro and HCL Technologies reported their financial results for the third quarter of financial year 2023-24.

While Azim Premji's Wipro posted a 1.4% sequential drop and 4.4% year-on-year decline in revenue for the October-December quarter at Rs 22,205 crore, HCLTech grew 6.5% annually and 6.7% on a quarterly basis to report Rs 28,446 crore in revenue.

“Despite the QoQ revenue drop, Wipro's future looks promising because of its strong customer focus and business pipeline,” senior principal analyst at research and consulting firm Garner Biswajit Maity said, adding that the company enjoys good customer satisfaction ratings from a majority of its clients.

A similar trajectory was seen in the margins of the two tech giants. Wipro registered a mere 1% QoQ jump coupled with a 12% annual decline in consolidated net profit at Rs 2,694 crore, meanwhile HCLTech saw its net profits rise 13.5% on a quarterly basis and 6.2% annually to Rs 4,350 crore.

As Wipro’s order book stood at $3.8 billion for the quarter ended December 31, 2023, HCLTech bagged new deals to the tune of $1,927 million alongside 18 large deals during the quarter. The latter also revised its FY24 revenue growth guidance to 5-5.5%. 

Defying the trend seen amongst its peers, HCLTech expanded its workforce by 3,617 in the third quarter, welcoming around 9,000 freshers in FY 2024. Attrition at the company dropped to 12.8%, from 14.2% in the September quarter. 

Wipro on the other hand saw its employee base shrink by 4,470, despite attrition levels dropping to a 10-quarter low of 12.3% in the October-December period.

The board of directors of both HCLTech and Wipro declared interim dividends of Rs 12 and Re 1, respectively.

“The demand environment overall remains cautious. Clients are still making conserting investments, still looking for efficiency, more returns on investments and better optimisation for existing investments,” Wipro Chief Executive and Managing Director Thierry Delaporte said.

“As the demand environment recovers, and in line with management expectations as well, we expect consulting services to make a promising comeback. Demand challenges on the American side, especially in the BFSI segment, are expected to persist for longer,” Nirav Karkera, who heads research at financial services firm Fisdom, said. 

Stocks of IT bellwethers TCS and Infosys rose 4% and 8%, respectively, on Friday, after the two companies reported better-than-feared results on Thursday.