TCS, INFY, Wipro: How major IT firms have performed in FY24. What to expect next year? – Business Today

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In the ongoing results season, major IT companies have released their March-quarter (Q4FY24) earnings and complete FY24 financial performance of these IT companies is now available.
Data available from ACE Equity showed that in the benchmark Nifty IT index that has 10 constituents, as many as nine companies have posted their results so far.
While six IT companies have registered a growth in revenues and profits, three companies have witnessed a decline in top-line and bottom-line. Here are key details of financial performance of major IT firms in FY24 in the order of their profitability growth:
Persistent Systems: Profit after tax (PAT) surged 19% to Rs 1,093.5 crore from Rs 921.1 crore in FY23. Gross sales for year FY24 stands at Rs 9,821.6 crore, with an 18% annual revenue growth.
Tata Consultancy Services: With PAT of Rs 46,099 crore, TCS is the most profitable IT company in FY24. PAT has increased 9% from Rs 42,303 in FY23. Revenues have increased 7% to Rs 2.41 lakh crore.
Infosys: Profit surged 9% to Rs 26,248 crore in FY24 from Rs 24,108 crore in FY23. Gross sales jumped 5% to Rs 1.54 lakh crore.
L&T Technology Services: Profit rose 7% to Rs 1,306.3 crore from Rs 1,216.4 crore. Top-line increased 9% to Rs 9,647.3 crore.
HCL Technologies: With PAT of Rs 15,710 crore, profitability increased 6% and revenues zoomed 8% to Rs 1.10 lakh crore.
LTIMindtree: PAT has grown 4% to Rs 4,584.6 crore, while revenues jumped 7% to Rs 35,517 crore.
On the other hand, profit for Tech Mahindra declined 51% to Rs 2,386.3 crore, PAT of Mphasis declined 5% to Rs 1,554.8 crore, and Wipro registered a decline in profitability of 2% to Rs 11,135.4 crore.
IT sector outlook: Vinod TP, Research analyst at Geojit Financial Services says, “The Indian IT services industry is poised to continue moderate revenue growth in the near term on concerns over macroeconomic conditions and inflationary headwinds. However, operating profits are expected to improve with cost optimisation measures”.
He further added, despite these headwinds, critical spending and cost optimisation deals continue to gain traction. Hence, their stance remains ‘neutral’ in the short term but ‘optimistic’ in the long term for the sector. The rupee-dollar exchange rate can significantly influence the sector, with INR depreciation against USD benefiting exporting firms’ top-line.
IT companies, heavily exposed to US and Europe, often sustain stable revenue amid inflationary periods when the rupee depreciates. Furthermore, a relatively stable INR mitigates currency fluctuation risks, offering a buffer in the current macroeconomic environment.
“Given the likelihood of volatility due to concerns over macro headwinds, in the near term, it is advisable to focus on high-quality stocks, particularly those operating in niche areas that can showcase strong revenue growth. For long-term investors, adopting an accumulation strategy is recommended. Focusing on companies with strong balance sheets, particularly those involved in AI and Gen AI technologies with strong deal wins, and those companies derisking by diversifying across different sectors, could be a better pick,” said Vinod TP.
According to Sunil Damania, Chief Investment Officer at MojoPMS, in the current landscape, major IT companies are adopting a cautious stance due to macro uncertainties and geopolitical volatility. Analysis of the market reveals a tepid environment for discretionary spending.
Clients are prioritising projects that yield immediate return on investment (RoI) while conserving cash. Consequently, robust top-line growth in the IT sector is not to be expected. The Indian rupee is likely to maintain its present level without significant depreciation. Despite geopolitical tensions, the Indian rupee depreciated by less than 2 per cent last year. Thus, we anticipate that rupee depreciation will not provide tailwinds to the sector.
He added, when considering valuations, only a few companies are trading at rich valuations, indicating limited downside risk. “If the overall market sentiment turns negative, investors are likely to move towards a safe sector like IT, attracted by strong management, robust balance sheets, and high corporate governance standards. Thus, while the sector may experience some corrections in the near term, the medium- to long-term outlook remains excellent,” Damania said.
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