Top 10 listed IT cos. show revenue growth of 120%

BANGALORE: The Top 10 listed IT companies in India had raked in 71 per cent

of overall industry revenues (the bottom ten had a 1 per cent share in overall

revenues). And for these ten companies, revenues grew at 120 per cent, while

profits grew at 240 per cent. These were some of the data churned out of the

financial survey of latest Dataquest Top 20 issue.

The highlight of the survey was Soffia Software being rated third behind

Wipro and Infosys, respectively in the Final rankings. The company has jumped 40

places from 43rd position, last year, to 3rd this year. The company had

registered 472 per cent growth in sales for the financial year 2000-2001 while

profit jumped 565 percent. Another company which had a dream run along with

Soffia was Mastek surging from 40th position to 8th.

Some of the companies which sild in rankings were VisualSoft, which slid from

3rd last year to 11th position, while Aptech slipped from 10th last year to 21st

this year and Adam Comsof from 18th to 48th. The survey also revealed that the

top 10 listed IT companies in India had contributed 71 per cent of the overall

industry revenues in that year. The revenues of these ten companies grew at 120

per cent, while profits registered at 240 per cent.

However, IT scrips continued to reel under selling pressure losing most of

the dotcom and IT boom base they had acquired over the last two years. Market

leaders Wipro and Infosys Technologies alone registered erosion of a massive Rs

126,000 crore-plus in market capitalization, with Wipro taking a hit of over Rs

90,000 crore, according to the survey. Despite this fall, Wipro and Infosys

retained their top two positions in market capitalization.

The Dataquest analysis is based on latest audited data from 54 firms, with

collective revenues of Rs 14,703 crore. Certain companies that had a March 31

fiscal year-end were unable to provide audited reports. Similarly, for companies

with year endings of June 30 and September 30, the data used pertains to the

previous year. The authenticity of all data is assured by the fact that all the

data is audited. However, given the fact that the data pertains to different

years: 2000 and 2001-inter-company comparisons cannot be made nor does this data

reflect current performance.

"Last year, everyone in the industry was talking ESOPs worth millions of

dollars and jumping from one salary hike to another. This year, however, it was

a time for pink slips in the IT industry, both in India as well as overseas.

With the dotcom debacle, IT firms began cutting staff to remain viable,"

Dataquest group editor Prasanto K Roy said.

Both Wipro and Infosys tapped the American market, Wipro raising $113.80

million and listing on the NYSE, while Infosys walked the ADR road but is yet to

utilize the proceeds for the targeted acquisitions.

While companies had been reporting over 100% growth in sales and profits,

quarterly profit warnings are now becoming common among Indian IT firms. For

investors, the news could not have been worse as the frantic fund-raising

activities of software companies also slowed down with a number of firms

deciding to stay away from the markets.

At the same time, bigger firms continued to reach out to global capital

markets by listing their shares on the Nasdaq and NYSE. Satyam and Silverline

raised capital from ADR issues and some of them also acquired companies that are

increasingly available at bargain prices. SSI took over four companies during

the year. Even mid-sized firms like Infotech Enterprises, Melstar and Compudyne

Winfosys made acquisitions.

The domestic stock markets moved almost in tandem with the Nasdaq, falling

from the 5,000s to 3,000s during the year, the downfall being led by the tech

sector. Of the 54 IT companies for whom stock data is available, the average

fall has been over 70% while DSI-10, which stood at 2,626 at the beginning of

the year eased to just 837 losing over 68% reflecting the overall IT sector

slowdown.

The coming year brings a host of challenges as well as opportunities for the

IT sector and investors. Clearly, it is the top rung players who have maintained

their growth rates and investment. It has become imperative for investors to

verify the credentials of a company before they take the plunge. As the markets

touch the bottom, it is time to accumulate high quality IT stocks at bargain

prices.

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