HCL Tech raises guidance, Wipro posts strong Q2 revenues, but lower profits; Apple, Samsung to update 5G software

HCL Technologies, yesterday, beat fiscal second-quarter revenue expectations and increased its guidance for the full fiscal year, signalling demand remains strong for its services in cloud, engineering, and digital technologies amid a global economic slowdown. At Wipro, Q2 revenues matched street expectations, but profits for the September quarter fell nearly 10 percent versus the same period a year ago. Notes: HCL Technologies, yesterday, beat revenue expectations and increased its guidance for the fiscal year, signalling demand remains strong for its services in cloud, engineering, and digital technologies amid a global economic slowdown. The company’s shares were higher by more than 2 percent in early Mumbai trading. Shares at Wipro, however, fell as much as 5.4 percent after the company reported a 10 percent decline in profits. HCL Tech’s revenue for its fiscal second quarter rose 3.8 percent in constant currency terms, versus the first quarter and 15.8 percent from the year-earlier period. Revenues rose 1.9 percent in reported terms to $3,082 million from $3,025 million, India’s third-biggest IT services company said in an investor release. Analysts at Kotak Securities, for example, were expecting HCL Tech to report a 2.9 percent increase in revenues in constant currency, on a sequential basis. “Our bookings and pipeline continue to be very strong,” chief executive C Vijayakumar said. The company added $2.4 billion in new contracts in Q2, a six percent increase over the previous quarter and 16 percent from a year earlier. Revenues for the full fiscal year that ends March 31, 2023, are now expected to be in the range of 13.5 percent to 14.5 percent, HCL Tech said, surprising analysts who were expecting it to retain its July projection of a 12-14 percent increase over FY22. At fourth-ranked Wipro, revenues were in line with analyst expectations, increasing 4.1 percent quarter on quarter to $2.8 billion for Q2 and 12.9 percent from a year earlier, in constant currency. India’s top IT companies continue to be highly profitable, but margins are under pressure across the sector due to attrition rates that are twice as high as last year. HCL Tech reported operating margins of 18 percent for Q2, compared with 19 percent a year earlier, but higher than the previous quarter’s 17 percent. Profits, for the Noida headquartered company, for the three months ended Sep. 30 rose to 7 percent to Rs. 34.89 billion from the year-earlier period. At Wipro, the Q2 operating margin was 15.1 percent versus 17.8 percent a year earlier. And profits fell nearly 10 percent to Rs. 26.5 billion rupees for Q2 from Rs. 29.3 billion a year earlier. Attrition, or staff churn, remains high at both companies, at 23.8 percent at HCL Tech and 23 percent at Wipro, on a 12-months basis, reflecting the trend in the industry. Top-ranked TCS, on Monday, reported attrition of 21.5 percent. Infosys, India’s second-biggest IT company reports its earnings after markets today. Apple and Samsung Electronics are among the companies that will upgrade software for their 5G-enabled smartphones in India by December, Reuters reports. Theme music courtesy Free Music & Sounds: https://soundcloud.com/freemusicandsounds