India’s top two software services have posted their results for the fourth quarter ending March 31, 2022. They reported profits and robust growth, however, they were affected by a high attrition rate.
Profit
TCS, India’s largest IT firm posted a net profit of ₹ 9,926 crores in the March quarter, up 7.4% due to positive business momentum.
Infosys, the country’s second-largest IT firm posted a profit of ₹ 5,686 crores, up 12% in the March quarter. The company said that this performance was on the back of a “strong demand environment” and “robust deal pipeline”.
Revenue
For the first time, TCS crossed the ₹ 50,000 crores revenue mark as it reported a revenue of ₹ 50,591 crores in the latest quarter. Infosys’ revenue, on the other hand, grew 22.7% to ₹ 32,276 crores in Q4FY22.
Hiring
Both the companies faced the wrath of high attrition rates. As a result, Infosys hired 85,000 freshers globally and in India. Further, It is planning to hire another 50,000 employees during FY23. TCS is one of the largest employers in the private sector and it has already added over 1,03,546 employees during FY22 and has taken the overall headcount to 5,92,195.
Targets
“We downgrade Infosys to Hold on lower potential market share gains in FY23e, a downward risk to profitability, and limited upside to growth estimates; cut TP (target price) to INR 2,040 from INR 2,225. Maintain Hold on TCS and cut TP to INR 3,760 from INR 4,310, ” said analysts at HSBC Global Research on April 14, 2022.
Analysts at Anand Rathi said that they expect the growth momentum to continue in the medium term supported by a strong deal pipeline and ramp-up of large deals, as far as TCS is concerned. They have recommended a buy rating on the stock with a revised target price of Rs.4,350 per share as of April 14, 2022.
Yes Securities is bullish on Infosys’ counter and has recommended a buy rating on the stock with a target price of Rs 2018 in its research report dated April 14, 2022.
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