What is the news?
Third Quarter Results: IT service majors beat street expectation for Q3 FY22 financial results
What does that mean?
The Q3 earnings season has started on a good note with several heavyweights reporting better-than-expected financial numbers.
It’s evident from the performance of the top three IT services players that growth is strong, even in a seasonally weak quarter.
In Q3 FY22, Infosys clearly led the chart with a strong performance on several fronts.
Both Tata Consultancy Services and Infosys beat the Street estimates on growth, while Wipro fell short of expectations after delivering consistent performance in the last three to four quarters.
Infosys Revenue from operations increased 22.91% year-on-year to Rs 31,867 Cr. The company said its consolidated net profit for the quarter ending December climbed 11.8% to Rs 5,809 Cr from Rs 5,197 Cr in the corresponding quarter last year.
The company expects revenue growth of 19%-20 % for FY22. Earlier it had estimated growth at 16.5-17.5% in constant currency.
TCS isn’t far behind
Tata Consultancy Services (TCS) revenue from operations rose 16% to Rs 48,885 Cr in the third quarter as compared to 42,015 Cr in the same period last year.
Its consolidated net profit for the quarter ended December climbed 12.3% to Rs 9,769 Cr from Rs 8,701 Cr in the corresponding quarter last year. The operating margin contracted to 25% from 25.6% in the preceding quarter.
Wipro disappoints in the net profit department
Wipro’s revenue from operations jumped 29.6% to 20,313.6 Cr, from Rs 15,670 Cr in the quarter ended December 2020.
Wipro posted Rs 2,969 Cr consolidated net profit for Q3 FY22. The company’s net profit remained flat as compared to a profit of Rs 2,966 Cr posted in the same quarter last year.
All companies said their growth was broad-based, with good growth across geographies and industry verticals.
All said their order-book positions are among the best ever. Mostly, the growth is being driven by digital transformation and cloud adoption.
How does that impact your wealth?
We have looked into the exposure of all equity mutual funds schemes to the IT sector. As per the latest portfolios, the exposure to the IT industry is a total of Rs 2,41,293 Cr, out of 17,06,311 Cr which is 14% of the total assets managed under all equity mutual funds.
The growth and positive performance among companies in IT will add value to your portfolio. Additionally, IT is a very large employer in the country and a positive outlook for the industry bodes well for the country and its economy as well.