TCS net up 35% at Rs 4,633 crore
Oct 15 2013 , Mumbai
Life sciences, media, banking, energy & utilities lead growth
The company had posted a net profit of Rs 3,434.37 crore in the same period last year, while the revenue during the corresponding quarter last year was at Rs 15,620.75 crore. TCS also reported a volume growth of 7.3 per cent during the period under review.
Operating profit grew by 51.5 per cent year-on-year to Rs 6,330 crore with operating margin at 30.2 per cent. In dollar terms, revenue during the period increased by 17 per cent year-on-year at $3.34 billion.
According to N Chandrasekaran, chief executive and managing director, TCS, the growth was led by life sciences, media, energy & utilities and BFSI (banking, financial services and insurance) sectors. All core geographies witnessed good demand, especially in Europe, North America and the UK.
“We continue to see a robust demand pipeline across markets and a unique opportunity to strategically partner and participate with clients, as they reimagine their future in multiple dimensions,” Chandrasekaran said, adding that the company has the benefit of Alti acquisition (TCS acquired French IT services company Alti in July) in the quarter under review, with the depreciating rupee also adding to that benefit.
“An improvement of 310 basis points is due to the currency depreciation,” said Rajesh Gopinath, chief financial officer.
The company added three new $100 million clients.
And it has signed eight deals across verticals, with two each in banking and telecom, and one each in life sciences, utilities, hi-tech and CPG. It also saw gross employee addition of 17,362, taking the total headcount to 2,85,250.
The utilisation rate stood at 83.4 per cent, while the attrition rate was stable at 10.9 per cent, it added.
“TCS results beat expectations on revenues as well as margins. The 7.3 per cent volume growth was significantly above expectations and also much above the growth reported by Infosys. The consistent high volume growth for the past several quarters reflects effective demand generation initiatives and efficient execution. The company has been able to effectively identify opportunities in a volatile macro environment and has been able to provide an integrated services approach to clients,” said Dipen Shah, head of private client group research at Kotak Securities.
Ankita Somani, research analyst for IT, Angel Broking, said, “A key positive surprise in the result was that the Ebit margin, which grew by about 315 basis points to 30.2 per cent, largely aided by sharp rupee depreciation. With this level of operating margin, now the margin gap between TCS and Infosys has widened by more than 600bps.
The bottomline grew substantially. The company maintained its gross hiring target of 45,000-50,000 employees for FY2014 which is encouraging.”
Aniruddha Mehta, IT & education analyst at India Infoline said, “TCS has posted volume growth of 7.3 per cent quarter-on-quarter against our expectation of 6.3 per cent. Revenue growth of 5.4 per cent was also higher despite impact of negative cross currencies and realisation correction. The operating margin expanded by around 300 basis points on the back of strong rupee depreciation and improved utilisation. The forex loss came at Rs 377 crore, much lower than Rs 600-700 crore guidance given earlier due to lower translation loss as the rupee strengthened towards the end of the quarter. During the quarter, TCS added three more clients with $100 million revenue, taking the number of 100-million-dollar clients from 19 to 22. It also registered eight new large deals in the quarter.”
TCS shares rose to 52-week high of Rs 2,258 in anticipation of robust earnings, but ended the day flat at Rs. 2,218 apiece.