TCS, Infosys Q3 results: a head-to-head comparison

Standing ahead of industry expectations, IT giants Infosys and TCS pulled off their best with their quaterly numbers. With Infosys bouncing back after series of flop quarters, TCS continued to maintain its momentum with a strong pipeline of projects.

A look on how these 'poster boys' of Indian IT played in Q3 shows that TCS is still leading the race while Infosys is making a turning around, slowly.

Net Profit

Infosys which failed to please the investors from the last eight quarters posted better than expected Q3 results with a net profit of Rs 2,369 crore against net profit of Rs 2,372 crore last year. The growth remains almost unchanged compared to previous quarter. The company's shares surge almost 20% since the results are announced, the highest since 2001.

TCS has posted a net profit of Rs 3,550 crore for the December quarter against a net profit of Rs 3,470 crore in the previous quarter, up by 26.7% y-o-y and 3.4% quarter-on-quarter. The revenues increased 3% to Rs 16,070 crore from Rs 15,620 crore in September 2012.

Geographies and New Clients

Infy's performance in Europe has been quite impressive in this quarter as it added as many as 13 new clients in its kitty, increasing revenue by over 16%. Overall, it added 53 new clients. North America grew at a slow pace at 1.6% while India showed a robust growth of 44.7%. The rest of the world grew by 7.4%. The BFSI vertical grew by 6.4%, manufacturing by 4.6% and retail and life sciences by 6.6% while energy, utilities, communication and services (ECS) showed the highest growth of 7.8% for the quarter. It won 8 large outsourcing deals amounting to $731 mn of total contract value.

For TCS, Latin America showed the double-digit growth sequentially, followed by India. BFSI remained the highest revenue earner followed by energy and utilities, manufacturing and retail and distribution. Its $100 million plus clients rose to 16 from 14.

Hiring and Attrition

TCS saw addition of 17,145 (gross) and 9,561 (net) people, taking its total headcount to 263,637. Attrition in IT services falls to 9.8%, overall attrition including BPO at 11.2%.

The net addition in Infosys was 1,868 persons during the quarter as compared to 3,266 a year ago. Though the utilization rate was only about 70%, compared to a target of about 78%.

EBITDA

TCS operating margin expanded by 56 basis points to 27.3%. EBIT is seen at Rs 4175 crore against Rs 4178.9 crore while EBIT margin is likely to be 26.24% compared to 26.8%, q-o-q. EBIT is seen at Rs 4175 crore against Rs 4178.9 crore while EBIT margin is likely to be 26.24% compared to 26.8%, q-o-q.

During the October-December period, Infosys registered an operating margin erosion of 66 basis points (bps) to 25.7% as against 26.3% in Q2.