TCS Sees Stable Third Quarter, Profit Beats Estimate
Revenue rose 1.5 percent on the back of well controlled operations.
Tata Consultancy Services Ltd.’s third quarter profit rose 2.9 percent on a sequential basis, beating the street estimate.
Net profit rose to Rs 6,778 crore in the October-December quarter from Rs 6,586 crore in the last quarter, the company said in a stock exchange filing. The consensus of analyst estimates tracked by Bloomberg stood at Rs 6,485 crore.
Revenue rose 1.5 percent to Rs 29,735 crore from Rs 29,284 crore in the July-September quarter, meeting the Bloomberg consensus estimate of Rs 29,585 crore. The revenue was bolstered by growing data analytics and the cloud business which helped the company overcome the slump in global IT spending, TCS said in its filing.
The dollar revenue grew 0.3 percent sequentially to $4,387 billion from $4,374 billion. The performance trailed Bloomberg consensus estimate of $4,381 billion. In constant currency terms, the company reported a 2 percent sequential growth.
Margins on earnings before interest, tax and depreciation remained flat quarter-on-quarter at 26.6 percent from 26 percent earlier, the company said in its media statement.
TCS will continue to focus on digital technologies and increase employee efficiency along with developing IP-based platforms and products, said chief executive officer and managing director, N Chandrasekaran.
The resilience of our business model and strength of our operating strategy has been brought to the fore by our performance in the third quarter, traditionally a quarter of weak demand. Our strengths in Digital, Platforms and Cloud as well as our deep knowledge of the customers’ domain are driving our ability to play a strategic role and make a holistic impact on the business.N Chandrasekaran, CEO and MD, TCS
The company has overcome some of the headwinds seen in the previous quarter but is seeing some softness in the healthcare business in the U.S., and communications industry in Europe, Chandrasekaran said at the press briefing.
TCS is preparing to address all issues arising out of U.S. visa regulatory changes, including visa fees and the number of visas allowed. While the management expects a normal fourth quarter going ahead, an increase in visa charges and employee bill will contribute to a rise in cost. Despite the expected increase in expenses, Chief Financial Officer Rajesh Gopinath said that there is no change in the company’s margin outlook, and it will retain margins in the 26-28 percent band.
Other Highlights
- The company added 18,362 employees on a gross basis; attrition stood at 11.3% quarter-on-quarter on last 12-months basis.
- It registered volume growth of 1 percent on a quarter-on-quarter basis.
- It added 5 new clients in $10 million and 2 clients in $5 million or more categories.
Segment-Wise Breakup
- Revenue from the energy and utilities business led the growth in its various segments, rising 5.8 percent sequentially.
- Banking and financial services (BFSI) sector saw a revenue growth of 1.7 percent.
- Communication, media and technology segment was the only one to contract, with a 2.9 percent de-growth.
Geography-Wise Breakup
- India business saw a strong 10.3 percent growth during the quarter, only behind Latin America which grew 12.5 percent quarter-on-quarter.
- North America grew 2.2 percent while the U.K. grew 1.7 percent, the company added.