TCS Q3 net profit surges over 50 pct to Rs 5,333 cr, raises hiring target

Written by Reuters | New Delhi | Updated: Jan 17 2014, 00:57am hrs
TCSTata Consultancy Services (TCS) has posted a 50.3 per cent rise in profit for the quarter ended December 31.
IT services major Tata Consultancy Services (TCS) today posted a better than expected growth of 50.3 per cent in consolidated net profit at Rs 5,333 crore for the third quarter ended December 31, aided by sectors like life sciences, manufacturing and improved business in Europe.

The country's largest software services exporter had reported a net profit of Rs 3,550 crore in the year-ago period, as per a BSE filing citing Indian GAAP figures.

Net profit as per Indian IFRS rose by nearly 50 per cent to Rs 5,314 crore in the third quarter as against Rs 3,549.62 crore in the corresponding period in the previous year.

Consolidated revenues of the city-based firm rose by 32.5 per cent to Rs 21,294 crore in the October-December quarter this fiscal compared to Rs 16,070 crore in the same quarter of 2012-13 fiscal.

TCS Chief Executive Officer and Managing Director N Chandrasekaran described the quarter as a "very good one".

Quarter-on-quarter (q-o-q) in rupee terms, TCS net profit rose by 15.1 per cent and revenues were up by 1.5 per cent.

"Strong international demand for our services and discipline in execution has helped TCS maintain its momentum and post robust growth in volumes as well as realisation," Chandrasekaran said.

He said the company signed eight large deals in the quarter but was not so optimistic about the domestic market till June or September.

He also described the margins above their estimate of 27 per cent and attributed the good numbers to lower forex losses.

International business grew by 3.8 per cent in dollar terms, he said, adding that attrition stood at 10.9 per cent during the quarter.

The diversified market presence and services portfolio has helped the company overcome seasonal weakness and soft demand in the Indian market, he added.

Buoyed by the results, TCS also increased its hiring target for 2013-14 fiscal by 5,000 to 55,000.

In US dollar terms, net income rose by 31.7 per cent to USD 858 million in the third quarter of the current fiscal against USD 652 million in previous fiscal, while revenues were up by 17 per cent to USD 3.44 billion against USD 2.95 billion during the same period.

Sequentially in dollar terms, net profit rose by 14.7 per cent and revenues were up by 3 per cent.

"Growth in Q3 was driven by industries like Life Science & Healthcare, Manufacturing, Media, Travel & Hospitality and Telecom.

The company's broad based presence across markets and services helped overcome seasonal weakness in some markets. Europe led growth, driven by the continuous investments being made in that market, while North America and UK also grew during the quarter," TCS CFO Rajesh Gopinathan said.

Among growth markets, Latin America, APAC and MEA registered strong growth. India business suffered from volatility and declined sequentially. Among service lines, Business Process Services, Enterprise Solutions, Global Consulting were the leaders, he added.

The company added two clients in USD 50 million category and four in the USD 20 million.

TCS said it continued to hire to support business growth.

There was a total gross addition of 14,663 people (net addition of 5,463 employees) taking total employee strength to 290,713 as of December 31, 2013.

"To support business growth, we have increased our hiring target by a further 5,000 employees for the current financial year to 55,000 professionals," TCS Executive vice president and Global Head Human Resources Ajoy Mukherjee said.

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TCS Q3 net profit up 50.3 per cent at Rs 5,333 crore

(AP) Leading Indian software exporter Tata Consultancy Services reported a steep increase in quarterly profit on Friday, signaling that global spending on information technology is picking up.

Net income was $858 million for the quarter ending Dec. 31, up 31.6 percent from the same period the previous year.

The company's bottom line was also aided by the weakened Indian rupee, which lost more than 10 percent of its value last year. India's IT outsourcers get most of their payment in dollars and euros from overseas clients and pay most employees in rupees.

Tata Consultancy's CEO, N. Chandrasekaran, said the outlook in the coming year was even brighter as clients regain confidence to spend. The U.S. economy is showing more signs of recovery after several years since the 2008 global financial crisis.

''Based on initial discussions with our customers, we believe 2014 will be a stronger year for us than 2013 as customers execute their business plans in a relatively stable environment,'' Chandrasekaran said.

The company said it added four new clients with contracts worth $20 million or more and hired more than 14,000 employees in the December quarter.

Stocks in Tata Consultancy Services were nearly flat at 2,350.30 rupees ($38.25) per share in trading on the Bombay Stock Exchange ahead of the earnings report, which was released after the close of trading Thursday.