Even though HCL Technologies(HCL) has bettered market expectations, TCS has emerged as the clear winner in the June quarter among top-tier IT players.

HCL's growth in key financial parameters and performance in several operating metrics is somewhat closer to Infosys' results. For the June quarter, while revenues grew by 3.9 per cent sequentially to Rs 4,299.5 crore, net profit expanded by 9 per cent to Rs 510.5 crore.

While the revenue growth numbers are more in line with Infosys' and better than Wipro's, volume (man months billed) expansion of just 3 percent makes HCL lag the former. Billing rates have held steady for the company as with its peers, though no increase is seen on this front over the next few quarters.

It must be noted, however, that unlike in the case of its peers, where annual wage hikes have come about in April and resulted in sequential profit declines, HCL follows a July cycle. This means that profits could fall in the September quarter and it expects a 300 basis points decline in margins as a result.

Revenues from segments such as manufacturing (its largest vertical), energy-utilities-public sector, and media have grown sequentially at a strong pace (8-20 per cent), even as financial services have expanded at a steady rate (4.5 percent). This is line with some of its peers.

But as with Infosys, the telecom vertical continues to be under pressure. Added to this, the BPO division continues to be loss making and has had a revenue decline too. For HCL, telecom revenues fell 7 per cent, while its BPO services division has had a decline of 4.5 per cent.

However, with greater focus on fixed-price projects and increasing its offshore component of revenues, it has been able to ensure better realisations and also optimise costs. Continuous reduction in forex losses too helped. This has resulted in steady increase in operating margins over the past year to 18.5 per cent levels in June 2011.

In the final analysis, from the June quarter results, TCS certainly appears to be the industry leader. It has delivered much higher growth than peers in volumes, revenues and producing broad-based growth across verticals including telecom.

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