Infosys, Wipro beat Street, differ on AI

Both raise headcount; HI revenue up for Infosys, down for Wipro

- Jas Bardia

Infosys Ltd put up a better-than-expected show in the September quarter and raised the lower end of its full-year guidance, even as it cautiously watched a turbulent world.

While cross-city rival Wipro Ltd too beat the Street, its performance paled in comparison, growing at a slower pace and profitability declined.

Infosys, India's second-largest IT services firm, ended the September quarter with $5.08 billion in revenue, up 2.66% from the June quarter and 3.77% from the previous year. More than half of the gains came from banks and financial institutions, the company's biggest client base.

The Q2 performance of Wipro, India's fourth-largest IT firm, was relatively sedate. Its revenue was $2.6 billion, up 0.65% sequentially and down 2.1% on a yearly basis. Like Infosys, much of its business was pulled up by banks, while revenue from most other verticals declined.

Banks make up slightly more than a third of Wipro’s business.

This wraps up earnings for India’s five largest IT companies, with the biggest—Tata Consultancy Services— reporting the weakest performance and third-largest, HCL Technologies Ltd, proving to be an outlier.

TCS, HCL Tech and Tech Mahindra Ltd ended the second quarter with revenues of $7.47 billion, $3.64 billion and $1.59 billion, up 0.61%, 2.79% and 1.41% on a sequential basis, respectively.

Three of the Big Five grew revenues in the first half of the fiscal year. The rest didn’t.

Revenue divergence

While revenues at Infosys, HCL Tech and Tech Mahindra grew 4.3%, 5.6% and 0.1% to $10 billion, $7.19 billion and $3.15 billion respectively during the first half, TCS and Wipro saw revenue decline—down 1.9% to $14.89 billion for TCS and 1.8% to $5.19 billion for Wipro.

This raises a warning sign for the two companies, since the first half is traditionally stronger for homegrown IT services firms due to more billing days and fewer holidays.