IT stocks plummet on weak earnings; Blinkit to shut some stores in Delhi-NCR permanently

This and more in today’s ETtech Top 5

Also in this letter:
■ Apple executives excited with India store launch
■ A new definition of startups on the anvil?
■ Sundar Pichai bats for AI regulation

IT stocks plunge after muted earnings

Indian IT stocks plummeted on the bourses on Monday after disappointing Q4 earnings from bellwethers TCS and Infosys presented a bleak outlook for the overall sector amid continuing global macro headwinds. Infosys led the slump, falling over 12% in intraday trade, and registering its worst single-day loss since 2019.

How bad was the fall? Dragged by Infosys and TCS after their disappointing Q4 earnings, the Nifty IT index declined nearly 8% in Monday’s trade.

Infosys shares were the worst laggards in today’s trade as the stock plunged over 12% to Rs 1,219 apiece. LTIMindtree, Persistent, Tech Mahindra, LLTS, Coforge, and HCL Tech fell over 5%. Mphasis and Wipro touched their 52-week low of Rs 1,660.6 and Rs 351.8, respectively.

Earnings weigh: In Q4FY23, Infosys’ net profit — 8% growth at Rs 6,128 crore — and revenue from operations — a 16% rise to Rs 37,441 crore — were below analysts’ estimates. An ET Now poll had projected the net profit to be around Rs 6,550 crore while revenue was pegged at Rs 38,850 crore.

Meanwhile, TCS reported a 16.9% year-on-year (YoY) rise in its March quarter revenue at Rs 59,162 crore while profit rose 14.76% YoY to Rs 11,392 crore. Both the top and bottomline figures were below Street estimates.

Also read | Won’t forego margins for growth: TCS CEO-designate K Krithivasan

Dip in hiring: We reported on April 15 that TCS and Infosys recorded a near two-third drop in cumulative hiring in fiscal 2023 compared to the previous year.

Together, TCS and the second-ranked Infosys added 51,819 people in FY23 on a net basis compared to the 157,942 hired the year before. In Q42023, TCS added just 821 people while Infosys reported a decline of 3,611 in headcount, as global uncertainty dragged down technology spending.

Blinkit tells riders it is shutting some Delhi-NCR stores permanently

Zomato-owned quick-commerce platform Blinkit has told protesting delivery executives that it is shutting some of its dark stores in Gurgaon and Delhi in the backdrop of delivery executives going on strike.

Why the protest? The workers are demanding a rollback of the company’s revised payout structure, which they claim is resulting in a reduction in their earnings.

Blinkit delivery executives went on a strike last week across Delhi, Gurgaon, Faridabad, Ghaziabad and Noida after the company changed its payout system from a flat Rs 25 per delivery (plus Rs 7 during peak hours) to a Rs 15 per delivery minimum fee along with a distance-based component.

Rivals gain: Blinkit’s rivals told us that they have been witnessing a bump in sales from their dark stores following the closure of its stores in light of the protests.

Tata Group-owned BigBasket’s quick-commerce vertical BB Now saw incremental order growth of 28% in Delhi, and 43% in Gurgaon and Noida last week following the strikes.

Zepto also saw a 40% jump in orders from Delhi-NCR last week after the strike began, while Swiggy’s Instamart saw a 10-20% rise in orders.

‘1% revenue loss’: In a research note, brokerage firm ICICI Securities said Zomato has already lost approximately 1% in revenue from its grocery delivery business Blinkit and around 0.15% of consolidated revenue for the first quarter (Q1) of FY24 due to the ongoing strike.

The brokerage firm maintained a ‘buy’ call on Zomato’s stock at Rs 54, with a target price of Rs 65, but expects Zomato’s food gross order value (GOV) to remain flat sequentially in the Q4FY23 earnings, despite the restart of Zomato Gold.

Apple gives a preview of its Mumbai store; FY23 India sales at $6 billion

The opening of new retail stores in Mumbai and Delhi will help Apple create deeper connections with customers in the Indian smartphone market, according to Deirdre O’Brien, senior vice-president of retail and people at the Cupertino-based company.

Deeper connections: “I would like to say that retail is where the best of Apple comes together. Since we opened our Apple store online here in India, we’ve been able to create meaningful connections with our customers all across the country,” O’Brien said.

Cook excited: Apple chief executive Tim Cook has said the US tech major is “excited” to be building on its over 25-year history in India.

“India has such a beautiful culture and an incredible energy, and we’re excited to build on our long-standing history — supporting our customers, investing in local communities and working together to build a better future with innovations that serve humanity.”

Launch dates: Apple will open its first company-owned retail store on April 18 in Mumbai and a second in Delhi on April 20. The iPhone-maker has stipulated that about two dozen technology, electronics and ecommerce brands shouldn’t have any kind of presence near its store at Reliance Jio World Drive mall in Mumbai.

$6 billion in sales: Apple Inc.’s sales in India hit a new high of almost $6 billion in the year through March. Revenue in India grew by nearly 50%, from $4.1 billion a year earlier, according to a person familiar with the matter, who asked not to be named as the information is not public. Apple is scheduled to post quarterly earnings on May 4 and has signalled it expects total global revenue to decline.

Tweet of the day

G20 working to define startups based on size, revenue and innovation

The G20 countries plan to finalise a common definition of startups based on size of business, revenue and innovativeness by early July, with the aim of bringing uniformity in their valuation and taxation.

Details: The G20 Startup20 Engagement Group has begun working on a definition, the first draft of which is likely to be made public by May 15, officials said. “Lack of a common definition is a key issue because of which valuation internationally and the tax imposed are done differently,” said an official, who did not wish to be identified.

Startup, what’s that? As per the Department for Promotion of Industry and Internal Trade (DPIIT), an entity is considered a startup up to 10 years from its date of incorporation provided its turnover for any of the financial years since incorporation does not exceed Rs 100 crore.

Quote unquote: “There needs to be a clear understanding on how a jurisdiction views startups. The Startup Group is working on whether there can be complete harmony across all issues or flexibilities can be explored,” said Chintan Vaishnav, Startup20 India chair.

Why it matters getting an outcome on startups is crucial as the country has seen 40% growth in the number of DPIIT-registered startups, about 29,000, in the past one year, taking the total number of registered startups to 95,000.

Google CEO Sundar Pichai bats for AI regulation to avert its harmful effects

Amid growing concerns about the threat of radical development of generative AI-driven chatbots, Alphabet and Google chief executive officer Sundar Pichai has said that the push to adopt artificial intelligence technology must be well regulated to avoid potential harmful effects.

Quote unquote: In a broadcast interview, Pichai said “the urgency to work and deploy it in a beneficial way” keeps him up at night, noting that “it can be very harmful if deployed wrongly”.

Radical search changes: AI competitors pose the first serious threat to Google’s search business in 25 years. In response, Google is racing to build an all-new search engine powered by the technology. It is also upgrading the existing one with AI features, The New York Times reported.

Yes, but: ChatGPT has moved beyond being the talk of tech town. Almost every big tech company in the world is working on some form of generative AI.

As a result, many countries are keeping a close eye on the development and deployment of AI-related technology. While some have outright banned it, others are putting in the necessary guardrails. Here’s a look:

Today’s ETtech Top 5 newsletter was curated by Gaurab Dasgupta in New Delhi and Megha Mishra in Mumbai. Graphics and illustrations by Rahul Awasthi.