Here’s why Wipro shares are down and HCL Tech stock is up today

The country’s third and fourth most valued IT service companies HCL Tech and Wipro, respectively, came up with contrasting quarterly results after market hours on Wednesday.

This showed up in the early Thursday morning trades on the two counters with HCL Tech rising over 5% and Wipro skidding more than 3% in the first hour of trade.

Here’s a gist of what one can make of the two results.

Wipro

Wipro came up with a mixed picture in terms of revenues with the firm beating few analysts estimates but lagging behind what others expected for the three months ended September 30. But one area where it comprehensively missed street expectations was in terms of earnings.

Net profit at Rs 2,659 crore was down from Rs 2,930.7 crore in the year-ago period though it increased 4% sequentially compared to Q1 FY23.

Revenue at Rs 22,539.7 crore was up 5% sequentially and 14.6% over the same period last year.

IT services segment revenue was at $2.79 billion, an increase of 8.4% YoY with constant currency IT services segment revenue increasing 4.1% QoQ and 12.9% YoY. IT services operating margin for the quarter was at 15.1%, an increase of 16 bps QoQ.

The company did see a modest 30 bps decline in attrition from the previous quarter, though at 235 for the trailing 12 months it was still high.

The firm has given a guidance of sequential growth of 0.5-2% in revenue from IT services business ($2,811 million to $2,853 million) in the quarter ending December 31

HCL Tech

HCL surprised with better-than-expected numbers last quarter. The company’s net profit rose to Rs 3489 crore from Rs 3283 crore in the preceding quarter ended June 30 and Rs 3259 crore it clocked in the same quarter last year, beating street estimates. 

On the flip side, the net margins continue to be modest at 14.1%, compared to last year when it was in the 15.5-16% range. EBIT margin at 18% was also lower than 19% in the previous year but much better than 17% in the preceding quarter.

At the same time, the company posted strong revenue growth rising 19.5% year on year and 15.8% sequentially to Rs 24686 crore.

More importantly, the company upped its revenue and margin guidance for the full year. The firm said it expects services revenue to grow 16–17% YoY in constant currency and increased revenue guidance to 13.5–14.5%. It also said it expects EBIT margin to improve to 18–19%.