TCS Vs Infosys Vs Wipro Shares, ADRs, Upcoming Dividends: Which Mega IT Stocks To Buy After Q4 Results?

Three mega tech companies of India namely Tata Consultancy Services (TCS), Infosys, and Wipro have announced their Q4 and full-year earnings for FY24. Two of them have declared huge dividend payouts, with Infosys announcing the highest-ever reward. TCS outperformed its peers, while Infosys surprisingly held a steady performance, and Wipro reported mixed numbers.

Here is the comparison of TCS, Infosys, and Wipro's earnings, share price, dividend, and recommendations:

1. Tata Consultancy Services (TCS):

India's largest IT company backed by Tata Group in terms of market share, TCS was the first to announce its Q4 results, beating estimates.

Q4 Results: ITCS posted a consolidated PAT of Rs 12,434 crore, attributable to owners of the company, registering a growth of 9.1% YoY. Sequentially, the growth in the bottom line came in at 12.44%.

In the quarter, consolidated revenue from operations stood at Rs 61,237 crore in Q4FY24, rising by 3.51% from Rs 59,162 crore in the same quarter a year ago. While revenue was up by 1.08% from Rs 60,583 crore in Q3FY24. In constant current, revenue growth was at 2.2% year-on-year in Q4FY24.

Dividend: TCS has recommended a final dividend of Rs 28 per share having a face value of Rs 1 each for FY24. Earlier, TCS paid a whopping 4,500% dividend aggregating to Rs 45 per share for FY24 in a series of interims. In the previous fiscal, TCS paid dividends of a whopping 11,500% valuing Rs 115 per share.

Share Price: TCS share price stood at Rs 3874.20 apiece, marginally up after April 23rd market hours. The stock's 52-week high and low is at Rs 4,254.45 and Rs 3,126.60 respectively. Its market cap is at Rs 14,01,719.47 crore. YTD, TCS shares are up by only 2%. TCS does not have ADRs listed on NYSE.

Brokerages Recommendations: In its research note, Motilal Oswal said, "We continue to expect TCS to benefit in FY25 from the large BSNL deal execution. But continued uncertainty on growth pickup in North America and Europe is likely to weigh on overall growth, which we estimate at 8.8% YoY. Despite growing in single digits, TCS should be among the fastest-growing large-cap companies in our coverage universe. We factor in a USD revenue CAGR of 10.0% over FY24-26E."

Further, Motilal's note said with 4Q EBIT margin surprising on the upside, TCS should deliver a full-year EBIT margin of 25.6% in FY25, up 90bp YoY, despite limited incremental cost levers at its disposal. The growth recovery in 2HFY25 is likely to be driven by continued workforce optimization toward freshers and platforms.

Motilal expects FY25E/FY26E EBIT margins at 25.6%/26.4%, up from 24.7% in FY24.

On the valuation, Motilal's note said, "We have broadly maintained our FY25-FY26 EPS estimates. Over FY24-26E, we expect a USD revenue CAGR of ~10% and an INR EPS CAGR of ~15%. Our TP of INR4,600 implies 27x FY26E EPS, with a 15% upside potential. We reiterate our BUY rating on the stock."

Infosys:

The second largest IT firm, Infosys followed suit right after TCS with better-than-estimated numbers as well in Q4.

Q4 Results: In Q4FY24, Infosys posted a consolidated net profit of Rs 7,975 crore, before minority interest, registering a growth of 30% YoY and 30.5% QoQ. Consolidated revenue dipped by 2.3% sequentially but marginally up by 1.3% YoY to Rs 37,923 crore. In constant currency, revenue dipped by 2.2% QoQ and was flat on a year-on-year basis. Infosys said that it delivered $18.6 billion in FY24 revenues with a growth of 1.4% in constant currency and an operating margin of 20.7%.

For the financial year 2024-25 guidance, Infosys estimates revenue growth of 1%-3% in constant currency, while operating margin is at 20%-22%.

Dividend: Just like TCS, Infosys will be rewarding its shareholders with a dividend of up to Rs 28 per share which also includes a special dividend. The company recommended a final dividend of Rs 20/- per equity share for the financial year ended March 31, 2024, and additionally a special dividend of Rs 8/- per equity share. The record date for the Annual General Meeting and payment of final dividend and special dividend is May 31, 2024. The dividend will be paid on July 1, 2024.

Earlier for FY24, the company paid an interim dividend of 360% amounting to Rs 18 per share.

Share Price: Infosys stock ended at Rs 1441.70 apiece, up by 0.64% on April 23 with a market cap of Rs 5,98,430.56 crore. The stock's 52-week high and low is at Rs 1,731 apiece and Rs 1,215.45 apiece respectively. Unlike TCS, Infosys shares are down by 7% on BSE year-to-date. But Infosys has ADRs listed on NYSE, which is currently at $17.17 and down by 6.6% YTD.

Recommendation: In its research note, Kotak Institutional Equities said, "We bake in the miss in 4QFY24 numbers, lower-than-expected FY2025 guidance and contribution from the acquisition of in-tech leading to 1-2% cut in FY2025-26E US$ revenue estimates."

Kotak's note added, "We believe Infosys has the elements to deliver industry-leading revenue growth once the demand environment improves. We expect normalized growth from FY2026. We value Infosys at an unchanged medium-term multiple of 24X Jun 2026E earnings leading to an FV of Rs1,750 (Rs1,790 earlier). Maintain BUY."

Wipro:

Azim Premji-backed Wipro although reported a mixed performance in Q4, sequentially there has been improvement.

Q4 Results: Wipro's PAT is up by 4.95% from Rs 2,694.2 crore in Q3FY24, but down by 8.5% from its PAT of Rs 3,074.5 crore in Q4 of last year. Consolidated revenue came in flat at Rs 22,208.3 crore in Q4FY24, versus Rs 22,205.1 crore in Q3FY24. However, revenue declined by 4.4% from Rs 23,190.3 crore in the same quarter a year ago. While non-GAAP constant currency IT Services segment revenue decreased 0.3% QoQ and 6.6% YoY.

For Q1FY25, Wipro expects revenue from our IT Services business segment to be in the range of $2,617 million to $2,670 million. This translates to sequential guidance of (-)1.5% to +0.5% in constant currency terms.

Dividend: After its Q4 results announcement, Wipro also said that the interim dividend of Rs 1 declared by the Board earlier at its meeting held on January 12th, 2024, shall be considered as the final dividend for the financial year 2023-24.

Share Price: Wipro stock stood at Rs 462 apiece, broadly flat on BSE on April 23, with a market cap of Rs 2,41,407.21 crore. The stock's 52-week high and low are at Rs 546.10 apiece, and 370.60 apiece respectively. YTD, Wipro is also down by 3.2%. Wipro too has ADRs on NYSE. And currently, at $5.510, the ADR is down by 1% YTD.

Recommendation: Motilal Oswal said, "Given WPRO's weak 4Q exit and the near-term impact of the new CEO, we expect its FY25 revenue growth to be one of the lowest among Tier-1 IT Services peers."

The brokerage added, "We reiterate our Neutral rating as we look forward to 1) the execution under the new CEO, and 2) a successful turnaround from its struggles over the last decade, before turning more constructive on the stock. Our TP of INR490 implies 18x FY26E EPS."

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author or Greynium Information Technologies. The author, the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.