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TCS profit growth beats estimates

Mumbai, July 17: Tata Consultancy Services (TCS) today announced better-than-expected numbers for the first quarter ended June 30, 2014. Net profit of the country’s largest IT services exporter rose 26.9 per cent to Rs 5,058 crore from Rs 3,987 crore in the corresponding period of the previous year. Analysts had expected the company to report a net profit of around Rs 4,800 crore.

According to TCS chief executive officer and managing director N. Chandrasekaran, the performance came on the back of healthy growth across all industries and key markets.

Focus on operational efficiency enabled the company to overcome various margin pressures such as wage hikes and a change in the depreciation policy, Chandrasekaran said.

The company declared a dividend of Rs 45 per share, including a special dividend of Rs 40 apiece to mark the 10th anniversary of its initial public offering.

In dollar terms, too, the company topped Street estimates with a 5.5 per cent growth in revenue on a sequential basis to $3.69 billion. Experts had projected the growth at around 5 per cent.

During the first quarter, the company posted its highest incremental revenue (on a sequential basis) of $191 million in the last 15 quarters, driven by growth across markets led by North America, Europe, India and the Asia-Pacific.

Growth was also seen across all industry segments, led by media & information, life sciences, retail and telecom. All non-BFS (banking and financial services) segments grew more than 5 per cent sequentially. However, growth in the insurance vertical remained subdued.

To a query on how margins would pan out for the rest of the year, Chandrasekaran said it was likely to remain within the range of 26-28 per cent.

The total employee strength of TCS at the end of the first quarter stood at 305,431. The utilisation rate (excluding trainees) was at an all-time high of 85.3 per cent. However, the attrition rate was seasonally higher at 12 per cent.

Analysts gave a thumbs-up to the numbers, averring that the stock could rally when trading resumes tomorrow.

“TCS, with its superior market coverage across geographies, industry verticals and a wide array of services that it provides, is best placed to capture demand,’’ Ankita Somani, research analyst at MSFL Research, said.

TCS shares ended with nearly a 1 per cent loss to Rs 2,381.10 on the BSE as investors booked profits ahead of the results.

 
 
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