HCL Technologies Ltd (HCL) has continued its good run and done well in relation to its peers TCS and Infosys across parameters such as financials, growth across segments and operational factors in the June quarter. This makes Wipro the laggard among top-tier IT players in terms of performance, once again.

On the revenue front, HCL witnessed an increase of 3.1 per cent sequentially in dollar terms, which was slightly better than the rates managed by Infosys and much ahead of Wipro’s growth, but was lower than TCS’ figures.

Volume growth though, was a bit on the lower side for HCL compared to Infosys and TCS, but improved realisations have made up for the slip. The company also managed superior profit growth compared to all of its peers, aided by the fact that it has still not announced wage hikes.

But the numbers are impressive nonetheless. That the profit growth of 10.9 per cent has been managed with no significant help from hedging gains or other income components indicates better hedging mechanism.

Growth across segments

Revenues from key verticals such as financial services and manufacturing grew at a healthy 4.2-4.3 per cent in the June quarter. The media segment too expanded, though more at a pace matching the overall company’s revenue rate. Public services segment too grew at a rapid rate. Of course, the telecom vertical continued to sulk, a trend that was witnessed across peers, barring TCS which witnessed expansion in that segment.

HCL continued to ride on its strong presence in the infrastructure services space, which grew at a hectic 8.6 per cent sequentially in the June quarter.

But its enterprise application services offering, suggesting decreased traction in tapping into clients’ discretionary spends. TCS witnessed all-round growth across service offerings, while the higher-margin package implementation service led the growth for Infosys. In terms of geographies both Americas and Europe, especially the latter witnessed healthy expansion in revenues.

Client addition in the $30-50 million categories has also been quite good for the company.

At over 80 per cent, utilisation is just a shade under market leader TCS, which indicates a robust visibility on the volumes front.

Two outperformers

From an industry standpoint, it augurs well that all the four top-tier IT players have a positive outlook. Infosys has retained its guidance, while Wipro has indicated a better quarter ahead.

But TCS and HCL have clearly stayed ahead of the pack in terms of performance as well as in their assessment of the future. The sheer consistency in delivering market-beating performance and managing balanced growth these two companies, as also the US-listed Cognizant, are likely to continue enjoying market premium over the other players. HCL, which has mostly traded at a discounted price-earnings multiple compared to others, is now ahead of Wipro and almost at the same level as Infosys. It may soon get into premium zone, if it continues to deliver the way it has.

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