HCL Tech beats Wipro to become India’s third largest IT company
- Shiv Nadar’s HCL Tech has beaten Azim Premji’s Wipro to become the third largest IT company in India.
- For years, HCL Tech reported higher revenues than Wipro, but it was still behind in terms of market cap.
- With the Indian IT companies witnessing a sharp correction in 2022, HCL Tech is now bigger than Wipro in terms of revenues, profits and market capitalization as well.
AdvertisementShiv Nadar’s HCL Technologies has been the third largest IT company in India by revenue for the last four years. But the market never saw it so, as Wipro had retained its position as the third-largest IT company by market cap.
It’s true no more as HCL Tech sprinted ahead of Wipro by a healthy margin with a market cap of over ₹2.5 lakh crore, compared to Wipro’s ₹2.2 lakh crore.
It’s worth noting that HCL Tech beat Wipro not because its shares surged this year – both the companies’ stocks have seen a massive drawdown this year. It’s just that HCL Tech’s shares have fallen much lower than Wipro.
It’s not just that these two companies have seen a meltdown. All IT stocks fell this year, with Wipro being the worst performer.
|Company||Current share price||YTD performance|
Source: NSE, August 30, 2022
Young blood – relatively
HCL Technologies is much younger than Wipro – founded in 1991, it’s a 30-year-old company, while Wipro is almost an octogenarian, as it was founded in 1945 as a maker of vegetable oils.
It adapted to the changing business environment in the 1970s and 80s and transformed itself into an IT company.
HCL Tech is also slightly leaner than Wipro in terms of operations, with a headcount of 2.1 lakh as against Wipro’s 2.5 lakh.
AdvertisementHere’s how the two companies stack up:
|Revenue (FY22)||₹85,651 crore||₹79,093 crore|
|Net profit (FY22)||₹13,524 crore||₹12,238 crore|
|Headcount (Q1 FY23)||2,10,966||2,58,574|
|Attrition rate (Q1 FY23)||23.8%||23.3%|
|Market cap (August 29, 2022)||₹2,56,061 crore||₹2,27,428 crore|
Source: NSE, company reports
High attrition rates, supply chain issues, soaring inflation and the Russia-Ukraine war has poured cold water on the Indian IT sector, which witnessed an unprecedented boom in the past two years.
This resulted in JP Morgan downgrading the Indian IT sector to “underweight” – the investment bank said in its report that the revenue has peaked and margins will continue to be under stress. It also noted that the slowdown could worsen in FY23 – and the June quarter results reflect this reality too.
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