While the quarter was impacted by the COVID-19 outbreak, revenue was aided by deal wins in the past quarters with margins being stable for all the companies.

Here’s how the top software service providers fared in the quarter ended December 2019.

HCL Tech only company to report ~10% revenue growth:

HCL Technologies is the only company which has reported double-digit revenue growth during the financial year ended on 31st March 2020 of 17% while TCS, Infosys and Wipro, on the other hand, reported single digit growth numbers. In constant currency (CC) terms too, HCL Technologies reported 16.7% growth on a YoY basis.

TCS Lead Margin Comparison for FY20:

EBITDA margins remained largely stable for all the companies. Wipro and HCL Tech saw a minor expansion in margins, while for Infosys and TCS, the margins contracted because of COVID-19 impact and higher expenses from transition to working from home on a YoY basis. However looking at the financial year TCS fairs well.

Profit After Tax:

HCL Technologies was the only company which reported double-digit Profit After Tax (PAT) of ~10% in the financial year ended in March 2020. All the other companies reported a single digit growth with TCS being the lowest with 2.7%.

Growth Across Verticals:

For Infosys; Communications grew by 15%, TCS; Communication, Media & Technology grew by 8.5%, Wipro; Consumer Business Unit grew by 8.6% and HCL Technologies; Manufacturing grew by 34% for the financial year ended March 2020.

These verticals were the highest earnings vertical for the top four largest IT companies.

North America Comparison:

Across geography, North America reported growth across all the four companies. Infosys and Wipro reported the highest revenue from the region while TCS and HCL Tech were the last two. All the four Indian software service providers reported a mixed performance in North America which is their largest business geography.

TCS remains best in maintaining the Attrition Rate:

While maintaining the lowest attrition is always considered good for the company and following this TCS has the lowest attrition rate of 12.1% amongst its peers. Infosys had started financial year 2020 on a strong note but its attrition rate continues to be high as compared to its peers and stood at 23.4%

Growth Guidance:

Typically all the top 4 IT companies refrained from sharing growth guidance due to the uncertainty surrounding the impact of COVID-19. However, companies would continue to present guidance Once things get normal.

Teji or Mandi?

The final quarter of financial year 2020 had begun on a steady note for large-cap Indian Information Technology companies but lockdowns in the last two weeks of March had impacted the earnings performance. The management of all the four companies have suggested that the next few months are likely to be most challenging.

However, our take is Teji for HCL Tech as the company’s execution was best in the last financial year 2020 compared to peers with a revenue growth of 17% enabled by a strong set of deal wins in the second half of the last financial year 2020.

Teji Mandi is a proactive investment manager for everyone. To read more of our research, please visit https://blog.tejimandi.com