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Top 5 IT Companies in India by Growth

Aug 2, 2022

With the onset of the Covid-19 pandemic, IT companies saw a boom. This was due to the increasing importance of work from home.

The Indian IT companies saw a doubling of sales growth during the period.

These IT giants are seeing a rise in demand due to change in demand profile of digital technology services.

These demand changes are for cloud computing and IoT (Internet of Things). This has created a long-run growth opportunity for IT companies.

They possess large exploitable opportunities and are some of the fastest growing companies.

Over the years these companies have outperformed the average sales growth in the industry.

IT stocks over the years have had a history of scorching returns. This has made IT a superstar investment sector.

Here are five IT companies that have witnessed spectacular sales growth in the last 5 years.

#1 L&T Infotech

The first company on our list is L&T Infotech.

L&T Infotech is part of the Indian multinational conglomerate Larsen and Toubro.

The company is a global technology consulting and digital solutions firm. It conducts operations in 33 countries and serves more than 485 clients globally.

The company's sales in the last 5 years have grown at 19.2% CAGR while its net profit has grown at 18.8%. This growth was due to the continuous rise in the demand for IT services in the country.

For the June quarter 2022, the company reported a 26.6% YoY growth in revenue and 28% YoY growth in net profit.

The higher return was due to growth in banking and financial services by 35.95%. Also, ADM (Application Data Management) testing business saw a rise of 28%.

The total contract value of deal wins was over US$ 80 m. It bagged four large deals.

In May 2022, LTI announced the amalgamation arrangement with Mindtree.

The merged company will become the fifth largest IT services company in India with a combined market cap of US$ 18 bn.

The company expanded its offices in Kolkata and Coimbatore. It is also planning to set up an office in Noida.

It is to expand its Google cloud partnership. LTI is establishing a distinct business unit for Google Cloud's six core solution pillars.

To know more about the company, Check out L&T Infotech's financial factsheet and its latest quarterly result.


#2 Mindtree

The second company on our list is Mindtree.

It is the part of Larsen and Toubro group.

It provides services in e-commerce, mobile applications, cloud computing, digital transformation, and testing.

The company, in 5 years, has delivered a CAGR growth of 15% in sales and 32% in profit.

The growth was due to the adoption of the IT-powered remote working culture.

For the June quarter, the company delivered a YoY growth of 36% in revenue and 37% in net profit.

The rise was due to the increase in the client base of the company. The company added 7 new clients to total of 274 active clients in June.

For the year 2022, the company bagged five new projects. This has led to the highest ever order book of US$ 570 m.

As a part of the expansion plan 2022, Mindtree inaugurated its first development centre in Kolkata. The company is expecting to double its headcount in 2023.

To Know more about the company, Check out Mindtree's financial factsheet and its latest quarterly result.


#3 Tata Elxsi

The third company on our list is Tata Elxsi.

Tata Elxsi is the product design arm of the multi-billion Tata Group. The company focuses on design thinking and the application of digital technologies.

It is one of the leading suppliers of design-based technology services across sectors.

The company's offshore revenue mix has historically been higher than its peers at 60%.

In the last five years, Tata Elxsi's sales has grown at a CAGR of 14.8%. Also, the net profit of the company saw a CAGR growth of 25.8%.

Health care and OTT (Over-The-Top) platform were the key growth drivers of the five years performance.

For the June quarter, the company delivered a YoY growth of 10% in revenue and 41% in net profit.

This was due to 23% growth in media and communication vertical and 26% growth in the healthcare vertical.

The company is expanding its marquee client base and plans to win longer strategic deals with its key clients.

For 2022, the company has bagged five big deals. These deals are for its IoT platform and cyber security services.

It is expecting to deliver a double-digit growth for the financial year 2022 due to the large deals.

The stock has given multibagger returns of 215% for 2022.

To Know more about the company, Check out Tata Elxsi's financial factsheet and its latest quarterly result.


#4 HCL Technologies

The fourth company on our list is HCL Technologies.

It is one of the fastest-growing IT service companies.

HCL provides modern software products to global clients. These products are for their technological and industry-specific requirements.

The company operates across sectors including, banking, energy, and utilities.

Over five years, it has reported a CAGR of 12.5% in sales and a CAGR of 9.5% in net profit. A strong order book, robust hiring and client additions have been factors for the constant growth.

For the June quarter 2022, the company reported a growth of 16% YoY in revenue and 2.4% in net profit. The growth was due to 23% YoY increase in its R&D segment.

It is to acquire Quest Informatics for Rs 150 m. Quest Informatics is a global leader in the after-market digital platform.

This acquisition is to increase the product offering in the after-market space.

The company's order book saw a rise of 23.4% YoY to US$ 2 bn for the July quarter. It has received 16 deals across its business segments.

For the July quarter company also received two large-sized deal for end-to end services.

To Know more about the company, Check out HCL Technologies's financial factsheet and its latest quarterly result.


#5 Infosys

The last company on our list is Infosys.

Infosys is the second largest IT company in India. It offers a range of digital and traditional IT services.

The company provides end-to-end business solutions. It includes design development, product engineering, and maintenance systems. The company also provides software products to the banking industry.

Over five years, it has reported a12% CAGR in sales and 9% in net profit.

Infosys's Cobalt-led cloud technology and product differentiation technology were the main sales driver.

For the June quarter 2022, the company reported a growth of 23% YoY in revenue and 3.2% in net profit.

The digital segment of the company saw a revenue rise of 61%, driving the growth in the revenue of the firm.

Infosys is one of the companies embracing blockchain technology in India. In July 2022, a subsidiary of Infosys, finished a blockchain solution for a firm in California.

For 2022, the company has won large deals amounting to US$ 9.5 bn.

The company in 2022 launched Infosys cobalt financial service cloud. It was to expand the cloud platform of the company.

Infosys announced a collaboration with Dow Jones to develop new AI-enabled digital program.

To Know more about the company, Check out Infosys's financial factsheet and its latest quarterly result.


Following is the performance for the IT companies based on the sales growth.

Performance of IT Companies

Company 5 years sales
growth (%)
5 years profit
growth (%)
5 years stock
price growth (%)
5year
ROE (%)
L&T 19.2 18.8 35 28.5
Mindtree 15 32 46 27
TATA Elxsi 14.8 25.8 58 29.7
HCL Technologies 12.5 9.5 16 22.1
Infosys 12 9 25 26
Source: Equitymaster

Why Should You include IT stocks in Your portfolio?

Indian IT stocks have given multi-bagger returns over the years. It has made the industry a great attraction for value creation.

This companies saw a rough patch since the start of 2022. It was due to high attrition rate and global recession.

The situation is improving due to the structural changes in digital technology. The Banking and Financial (BFSI) segment is showing relentless demand. This is a good sing for the growth of IT companies.

There is competition in this sector to capture market share. This gives investors value and growth opportunities.

Top investing gurus of India are indicating towards the fundamentally strong stocks in the IT. They are trading at cheaper valuations. You can dig deep into it to find the best multibagger stock for next 10 years.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...

FAQs

1) What is the best IT Stock in India?

The Indian IT industry is a major contributor to the Indian economy. The sector contributes around 7.4% to India's gross domestic product (GDP) as of 2022 and comes with massive tailwinds. It is expected to contribute 10% to India's GDP by 2025.

The sector is vast, with many companies operating in different verticals such as IT services, business process outsourcing (BPOs), research & development (R&D), etc.

With this growth comes the need for more talent, which means that there is an increased demand for developers and engineers.

Here is a list of the best IT stocks in India which score well on crucial parameters.

This list is filtered using Equitymaster's Indian stock screener which takes into account their return on equity (ROE), sales growth and profit growth.

#1 TCS

#2 Infosys

#3 Wipro

#4 Info Edge

#5 Mphasis

#6 Oracle Financial

#7 NIIT

Please note, these are not recommendations by any stretch. Just a list of stocks to track.

2) What are the top 10 tech stocks in India?

Disruptive technology stocks in India are changing the way we live.

These companies are disrupting existing business models and creating new ones, leading to the creation of entirely new industries.

To take advantage of the technological disruptions that are happening around us or going to happen, we need to look at technology companies making this possible. Here are the top 10:

#1 TCS

#2 Infosys

#3 Wipro

#4 Info Edge

#5 Mphasis

#6 Oracle Financial

#7 NIIT

#8 HCL Technologies

#9 Tech Mahindra

#10 L&T Infotech

Please keep in mind a very important point. All the regular rules of investing apply to these stocks as well. Just because this is an exciting sector with huge profit potential, doesn't mean you should relax your investing criteria.

Analyse every technology stock on the basis of its fundamentals and do go overboard on the valuation front.

3) Where can we find a list of IT stocks in India?

The details of listed IT companies can be found on the NSE and BSE website. However, the overload of financial information on these websites can be overwhelming.

For a more direct and concise view of this information, you can check out our list of IT (large) stocks and IT (others) stocks.

You can also read our IT sector report and check the latest IT sector results.

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