TCS Q2 results out: What to expect from Wipro, Infosys, HCL Tech and other IT companies?

IT giant Tata Consultancy Services (TCS) Ltd presented it September quarter results on Friday. As per the results, the IT bellwether registered a net profit of Rs 9624 cr for the quarter ended September 2021, compared to Rs 9,008 cr reported in the June quarter. It has reported a net profit of Rs 7,475 cr in the corresponding quarter of last fiscal.  

Nifty IT Index was also the index topper on NSE with with 4.7% gain for the week ended October 8. The index was also top gainer jointly with Nifty smallcap50 with 2.0% gains each on Friday.  

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Meanwhile, as TCS results are for everyone to see, what an investor could expect from other IT sector companies as far as Q2FY22 results are concerned and which shares should be in focus, explains Zee Business senior research analyst Kushal Gupta.  

He said seasonally Q2 is called strong quarter for IT sector space. "Largely D-sreet's expectation is very positive and revenue growth by top IT companies is pegged to be around 5 per cent in Q2 FY22. Overall, 4 to 7% growth is expected on QoQ ," he said. 

Global IT services provider Accenture Q2 results will also act as precursor for other IT companies as we have seen that when Accenture results came last, there was good action seen in the IT space, said Kushal. We can, however, expect pressure on margin from Indian IT companies as many IT companies have announced wage hike, which will certainly impact their earnings, he said. Besides, minor cut in subcontracting and utilisation rate will also affect margins to some level, said the research analyst.  

"In that case, particulary the focus should be on Infosys, Wipro and HCL Tech. MidCap IT companies are expected to perform even better, especially on revenue front. On QoQ, they can grow by 5 to 10%, while large cap IT companies are expected to grow by 4% to 7% as far as their revenues are concerned. Also, strong pipeline deals and completion of old deals would reflect in the results of the IT companies," he said.  

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He further said one should also keep in mind that IT companies' shares are trading at premium valuations from their historice levels and devise strategy accordingly. It may happen that the kind of numbers IT companies throw in Q2 results may not reflect in stock prices.  

TCS Q2 FY22 Results Key Highlights:   

• Operating Margin at 25.6%; +0.1% QoQ, -0.6% YoY 

• Net Income at Rs 9,624 crore, +14.1% YoY | Net Margin at 20.5% 

• Strong Client Addition: 5 New Clients (total: 54) in $100Mn+; 17 new clients (total: 114) in $50Mn+ 

• Net Cash from Operations at Rs 9,945 crore ie 103.3% of Net Income 

• Net headcount addition of 19,690 |Workforce strength: 528,748 

• Diverse and inclusive: Women in the workforce: 36.2% | 157 Nationalities 

• Building a G&T workforce: 417K+ employees trained in new technologies | 26K+ Contextual Masters identified | 6,900+ Elevate graduates