Which Tech Giants are at a 1-Year Low?

On 23 September 2022, all eyes were on tech giant Accenture as the company released its results for the fourth quarter.

The company's quarterly results were in line, but revenue and earnings guidance for the financial year 2023 missed analyst expectations. The result was weighed down by IT spending cuts amid high inflation and a strong dollar.

Accenture's results, which come before those of India's major IT companies, typically represent expectations for Indian IT as they follow a similar demand cycle.

The company's result is also a probable indication that the Indian IT firms may face headwinds and see the revenue growth momentum slowing down.

FIIs have already pruned exposure to the Indian IT sector amid the risk of an impending recession in the US and slowing growth in Europe.

Due to this, shares of IT stocks in India have taken a hit.

Let's look at which tech companies are trading at their one-year lows.

#1 Infosys

Leading the list is Infosys.

Shares of the company touched their 52-week low today.

This was due to the depreciation in the Indian rupee and overall sentiment toward IT stocks across the globe.

In the most recent June 2022 quarter, Infosys' margins fell 1.5% sequentially to 20.1%, dragged down by salary hikes.

Another problem hurting Infosys is the high attrition rate. Infosys recorded an attrition rate of 28.4% for the June quarter, up from 27.7% sequentially.

However, going forward, the company plans to increase its margins for the coming year.

Infosys has added 106 new clients for the June 2022 quarter. Out of which 38 new clients were for the US$ 100 m plus bucket while 278 clients were for US$ 50 m plus bucket.

Infosys is an Indian tech giant offering digital and traditional IT services. The company caters to various Industries, including finance, retail, energy and many more.

To know more, check out the Infosys factsheet and the latest quarterly results.

#2 Wipro

Second, on the list is Wipro.

Shares of the company also hit their 52-week low today. This decline was on the back of the heavy selling pressure due to the continuous disinvestment by FII.

FIIs have been disinvesting their stake since the September 2021 quarter. FII's stake stood at 8.1% in March 2022 quarter. This stake reduced to 6.9% by the end of the June 2022 quarter.

Further in the June 2022 quarter, Wipro's margins fell to 11.9% from 14.8% in the March 2022 quarter, dragged down by the variable pay to retain the employees.

The company has made the highest hiring among the tech giants reducing the attrition rate from 23.8% to 23.5% for the June quarter 2022.

To further curb the attrition rate, Wipro has rolled out an annual salary hike covering 96% of the employees. Earlier, Wipro had decided to hold back variable pay to its mid and senior-level executives.

On the other hand, fresher and junior-level staff will get variable pay after a 30% cut. The IT company, in an email, stated that the variable pay cut is happening due to operating margin pressure.

Even after the decreasing margins, Wipro has been rewarding its shareholders with continuous dividends.

For the financial year 2022, Wipro has paid the dividend of Rs 6 per share, the highest dividend in last 5 years. For the financial year 2022 dividend yield of the company stands at 1.01%.

Wipro is one of the leading global IT, consulting, and business process services companies. Its has operations in IT Services, IT Products, and India State Run Enterprise.

To know more, check out Wipro's factsheet and latest quarterly results.

#3 Tata Consultancy Services (TCS)

Third on the list is TCS (Tata Consultancy Services).

Shares of TCS have fallen significantly this year and have currently hit their 52 week low.

TCS, being an FII favorite stock, has seen heavy selling pressure after Accenture's future forecast. Further, the lower-than-expected June quarter result added insult to injury.

The company's operating profit margins fell to 18% in the June 2022 quarter from 19.7% in the March 2022. This was on the back of higher expenses due to the annual salary increase and only a little over 15% growth in the order book.

For the financial year 2023, the company is looking forward to launch mobility cloud suite for automotives.

TCS is one of the largest IT services companies in India and the flagship IT company of the Tata Group.

The company offers a host of IT services, including consulting, digital transformation, and artificial intelligence, to multiple industries such as banking, retail, and manufacturing.

To know more about TCS, check out TCS's financial factsheet and its latest quarterly results.

#4 Oracle Financial Services

Fourth on the list stands Oracle Financial Services.

Shares of the company are trading at a 1 year low. The stock has taken a heavy beating due to volatile sentiment in the global IT space and lower spending on Its products.

In the June 2022 quarter, the company's operating profit margin fell 2.6% sequentially to 35.1%, dragged down by salary hikes.

The company has carried out hiring among the tech giants reducing the attrition rate to 17% from 21% for the June 2022 quarter.

For financial year 2023, company is planning to set up first sovereign cloud regions for EU-based users to expand cliental base.

Oracle Financial Services is a subsidiary of Oracle Global (Mauritius). With strong in-house R&D centers Oracle has produced products used by banks in more than 150 countries around the world. Oracle assists in implementing AI in the company and IT processes.

To know more, check out the Oracle Financial company fact sheet and quarterly results.

#5 HCL Technologies

Last on the list stands HCL Technologies.

The shares of this tech giant are trading just 2.4% away from its yearly low of Rs 875.6. This downfall in the stock was due to weak margins of the company and the global plunge in IT stocks.

In the June quarter 2022, the profit margins declined by 150 basis points to 14% due to an increase in the operating expenses of the company.

The attrition rate increased to 23.8% in the June 2022 quarter from 11.8% in the same quarter last year.

To boost the employee base, the company is planning to higher 30,000 freshers which in turn will help to boost the margins.

HCL Technologies is one of the fastest-growing IT services companies in the world. The company offers IT and business services, engineering and R&D services and various products and platforms to its diversified client base across 46 countries.

To know more, check out HCL Tech's financial factsheet and its latest quarterly results.

To Conclude

As we can see that India best IT stocks, tech giants are at a 52-week low , the current scenario doesn't seem to be favorable, at least for the short-term duration.

This sector is expected to have a subdued movement and it may remain there till the growth cycle changes.

Amid all this, the IT sector will have and always will be the preferred sector to invest in over a long-term horizon for the investors in India. With the current bearish trend in IT, valuation comfort is available for investors with a long-term horizon.

It is due to the nature of the Indian IT business and its expansion into the 'sunrise' businesses.

Be it 5G technology, AI based business or web 3, Indian IT companies have access to these future technologies with the potential to drive growth and deliver performance over the long-term horizon.

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...