Also in this letter:
■ Disney exploring strategic options for Star India
■ Foxconn plans four-five fab lines
■ ETtech Done Deals
TCS net profit surges 17%; HCLTech consolidated profit up 8%
India’s largest IT company by market capitalisation Tata Consultancy Services (TCS) posted a robust 17% year-on-year (YoY) growth in its net profit at Rs 11,074 crore for the first quarter (Q1) of FY24. Meanwhile, HCLTech — number three by market capitalisation — reported an 8% YoY growth in consolidated net profit.
TCS financial highlights: While net profit was above the ET Now poll of Rs 10,890 crore, revenue, at Rs 59,381 crore, was a tad lower than the estimated Rs 59,500 crore. Sequentially, the topline rose a mere 0.4%, the slowest growth in 12 quarters, while net profit declined nearly 3%. The board approved an interim dividend payout of Rs 9 a share.
CEOspeak: “We remain confident in the longer-term demand for our services, driven by the emergence of newer technologies,” CEO K Krithivasan said. “We are investing early in building capabilities at scale on these new technologies and in research and innovation, so we can maximise our participation in these opportunities.”
Also read | Headcount addition at TCS, HCLTech further dips in Q1; attrition cools
HCLTech financial highlights: Consolidated revenue grew 12% YoY to Rs 26,296 crore in Q1, but was slightly off estimates at Rs 26,810 crore. The board has recommended an interim dividend of Rs 10 a share with the record date as July 20 for the dividend payment. Sequentially, the software services provider saw the topline fall 1.2% and the bottom line by 11.3%.
CEOspeak: “In Q1FY24, our revenue and people strength sequentially moderated in line with the demand environment,” said chief executive C Vijayakumar. “… large deals helped offset cuts in discretionary spending in these verticals. We are expecting other verticals to pick up as well shortly.”
Minimal impact on revenue: Nazara Tech on 28% GST for online gaming
Nitish Mittersain, CEO, Nazara Technologies
A day after the GST Council decided to levy a blanket 28% tax on online gaming, digital gaming company Nazara Technologies said the decision will have a minimal impact on its overall revenue, as it will apply only to the skill-based real money gaming segment of the company’s business, which contributed only 5.2% to its overall consolidated revenue in FY23.
Quote, unquote: “The company will proactively take steps to mitigate any potential impact to this segment of our business, and we anticipate minimal impact to our overall revenues,” it said in a filing. “The company remains committed to its growth agenda and will continue to pursue organic and inorganic opportunities across various segments.”
Stock impact: Nazara Tech’s shares tumbled around 14% in intraday trade on Wednesday before paring losses but still ending the day in the red, down 3.33% at Rs 683 on NSE. The stock recovered after the company issued a clarification to the exchanges.
Gaming firms unhappy: Online gaming platforms and their industry associations strongly opposed the latest decision, saying that it could trigger migration of users to illegal gambling and betting platforms, while also pushing Indian gaming companies to move abroad.
Disney exploring strategic options for Star India, Hotstar: WSJ report
The Disney+ Hotstar streaming service and Star India might soon get a new investor as Walt Disney is exploring strategic options for its Star India business, including a joint venture or a sale, the Wall Street Journal reported on Tuesday, citing sources.
What’s happening? The company has talked to at least one bank about ways to help the India business grow, while sharing some of the costs, according to the report. It is unclear which options, if any, Disney might pursue as the talks are still at an early stage. Disney took over Star India when it acquired the entertainment assets of 21st Century Fox in 2019.
Revenue drop: According to WSJ, Star’s overall revenue for the fiscal year ending September 2023 is expected to drop around 20% to slightly under $2 billion. Its Ebitda (earnings before interest, taxes, depreciation and amortisation) is expected to plummet 50% for that period, from about $200 million last year.
Further, Hotstar is expected to lose 8 million to 10 million subscribers in its fiscal third quarter after ending its partnership with HBO.
Double whammy: Earlier this year, HBO pulled out of its deal with Disney+Hotstar, potentially leading to higher subscriber churn for the OTT platform. Disney+ Hotstar has been the source for HBO content ever since the two companies signed an exclusive pact in 2015.
Prior to that, the streaming platform also lost out on the digital rights to the Indian Premier League — the richest cricket tournament in the world.
Foxconn looking to set up four-five fab lines in India
Global technology giant Foxconn has told the government it wants to set up at least four to five semiconductor fabrication lines in India, people aware of the development told ET. Foxconn said it was “working toward submitting an application” under the India Semiconductor Mission.
Driving the news: Foxconn has informed the Ministry of Electronics and Information Technology about the details of at least two memoranda of understanding (MoU) it has inked with technology partners, a senior government official told ET.
Tell me more: “We have asked them to sign definitive agreements and come back to us with the details on the proposed technology, the nature of agreements, the people involved in these, among others,” the official said, adding that the tech partner is likely to hold some equity in the new partnership.
Catch-up quick: On Monday, Foxconn scrapped its $19.5 billion joint venture with Vedanta to set up semiconductor manufacturing plants in India. ET had reported on June 26 that the JV was on shaky ground and Foxconn had started sounding out other Indian conglomerates as potential partners.
ETtech Done Deals
Fold Health raises $6 million: Fold Health, a healthtech platform solving primary healthcare, on Wednesday announced an additional $6 million in funding led by Iron Pillar. The new capital will be used to continue scaling the San Francisco and Pune-headquartered startup’s platform and to hire talent.
Fintech OneStack raises $2 million in funding: Gurugram-based fintech startup OneStack has raised $2 million in equity funding from a clutch of venture funds, including GrowX, Stride Ventures, 9Unicorns and Venture Catalyst. OneStack builds technology for Indian cooperative banks and credit societies and is aiming to digitise more than 1,000 of them this year.
Hectar Global raises $2.1 million led by Powerhouse Ventures: Agritech startup Hectar Global has raised $2.1 million in a seed funding round led by Powerhouse Ventures. The round also saw participation from WEH ventures, All In Capital, Indian Silicon Valley, and angel investors Anant Sarda and Adhish Ladha.
Today’s ETtech Top 5 newsletter was curated by Gaurab Dasgupta in New Delhi.
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