TCS, HCL Tech, Wipro give cautious guidance; what should investors do with these stocks after subdued Q1FY24 results?
Indian IT firms, Tata Consultancy Services (TCS), HCL Technologies, and Wipro, have revealed their financial results for the April-June quarter of the current financial year (Q1FY24). The results were a mixed bag, and their guidance suggests a cautious outlook amid some signs of positivity for the near future. This situation may make it slightly challenging for investors to determine their strategy regarding these stocks. TCS reported a 16.84 per cent year-on-year (YoY) rise in its consolidated net profit.
But on a quarter-on-quarter (QoQ) basis, TCS' consolidated net profit was down 2.8 per cent. The company's operating margin decreased from 24.5 per cent in Q4FY23 to 23.2 per cent in Q1FY24, a 130 basis point decline. It increased merely 0.1 per cent year over year.
“Basis how we have started the fiscal year, it (a double-digit growth) appears a tall order," TCS' chief operating officer N. Ganapathy Subramaniam said in a post-earnings press conference. HCL Technologies reported a 7.65 per cent YoY rise in the April-June net profit at ₹3,534 crore.
On a QoQ basis, the company's profit after tax (PAT) declined by 11.27 per cent. HCL Tech retained its guidance of 6-8 per cent constant currency revenue growth for FY24, and operating margin or EBIT margin at 18-19 per cent. According to the FY24 guidance, the constant currency services revenue growth is expected to be between 6.5-8.5 per cent.
Wipro's consolidated net profit for Q1FY24 rose by 12 per cent year-on-year (YoY) to ₹2,870.1 crore. But sequentially it was down 6.65 per cent. Income from operations for the quarter stood at ₹22,831 crore, up 6 per cent YoY and down 1.5 per cent QoQ.
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