1. TCS profit rises 8 pct at Rs 6,446 cr, beats estimates; CEO and MD Rajesh Gopinath pins performance on large deal wins, good pipeline

TCS profit rises 8 pct at Rs 6,446 cr, beats estimates; CEO and MD Rajesh Gopinath pins performance on large deal wins, good pipeline

TCS reported a net profit of Rs 6,446 crore for the three months to September, an increase of 8.4% quarter-on quarter, beating analysts’ estimates on the back of volume expansion, growth in revenues and improved profitability.

By: | New Delhi | Updated: October 13, 2017 6:03 AM
TCS, Tata Consultancy Services, Rajesh Gopinathan CEO and managing director Rajesh Gopinathan noted that the volume increase had been driven by demand across multiple industry verticals. (IE)

Tata Consultancy Services (TCS) on Thursday reported a net profit of Rs 6,446 crore for the three months to September, an increase of 8.4% quarter-on quarter, beating analysts’ estimates on the back of volume expansion, growth in revenues and improved profitability. Operating margins stood at 25.1%, a good jump of 171 basis points sequentially. Bloomberg consensus estimates had forecast the IT major’s net profit at Rs 6,287 crore on revenues of Rs 30,508 crore.

Revenues at the country’s biggest software services exporter were in line with forecasts at Rs 30,541 crore, rising 3.2% over the June quarter. Volumes grew 3.2% sequentially while revenues in dollar terms were
up a reasonably good 3.2% at $4.7 billion.

CEO and managing director Rajesh Gopinathan noted that the volume increase had been driven by demand across multiple industry verticals. “Large deal wins this quarter, a good pipeline, and bottom-ing out of the retail sector softness positions us well,” Gopinathan said.

Gopinathan said the apprehension that fintech would disrupt the BFSI space had not proven to be true. “I think everybody realises that fintech will be one more component in the ecosystem. Banks are now trying to transform their systems to participate in the fintech area and are experimenting with new business models,” he said.

The CEO said the offline retail space had been hugely disrupted by the threat of e-commerce where the primary value proposition was price.

“Customers are now looking for enhanced experience and that is where the brick-and-mortar players are scoring over online as they can offer a more connected experience to the customer,” he said. The CEO
believes the company’s customer base is vibrant and that TCS is well-positioned to participate as and when companies scale up. Gopinathan said retail could see recovery in the next few quarters.

Of the increase in margins, 50 basis points came from currency gains while the larger portion of 120 basis points came in through operational efficiencies and savings in multiple areas of business. The company reported an operating profit or Ebit (earnings before interest and tax) of Rs 7,660 crore.

Executive vice-president and global head, HR, Ajoy Mukherjee said the company is hiring at junior levels from campuses and also making lateral hires.

“Two years ago we started training everybody in digital and now 250,000 people have been trained. We are able to redeploy them and this is reflecting in our digital revenues which are around 20% of the overall revenues,” Mukherjee said.

The total employee strength of the company at the end of Q2FY18 was 389,213 on a consolidated basis with gross addition of 15,868 and net addition of 3,404 employees during the quarter. The total attrition rate fell to 12.1% including BPS, with IT attrition at 11.3%, down 30 basis points.

Speaking to reporters later, chief financial officer V Ramakrishnan said though sharp swings in the currency movements could have an impact, there is no change in the hedging policy of the company as of now.

(TCS) on Thursday reported a net profit of Rs 6,446 crore for the three months to September, an increase of 8.4% quarter-on quarter, beating analysts’ estimates on the back of volume expansion, growth in revenues and improved profitability. Operating margins stood at 25.1%, a good jump of 171 basis points sequentially. Bloomberg consensus estimates had forecast the IT major’s net profit at Rs 6,287 crore on revenues of `30,508 crore.

Revenues at the country’s biggest software services exporter were in line with forecasts at Rs 30,541 crore, rising 3.2% over the June quarter. Volumes grew 3.2% sequentially while revenues in dollar terms were up a reasonably good 3.2% at $4.7 billion.

CEO and managing director Rajesh Gopinathan noted that the volume increase had been driven by demand across multiple industry verticals. “Large deal wins this quarter, a good pipeline, and bottom-ing out of the retail sector softness positions us well,” Gopinathan said.

Gopinathan said the apprehension that fintech would disrupt the BFSI space had not proven to be true. “I think everybody realises that fintech will be one more component in the ecosystem. Banks are now trying to transform their systems to participate in the fintech area and are experimenting with new business models,” he said.

The CEO said the offline retail space had been hugely disrupted by the threat of e-commerce where the primary value proposition was price.

“Customers are now looking for enhanced experience and that is where the brick-and-mortar players are scoring over online as they can offer a more connected experience to the customer,” he said. The CEO believes the company’s customer base is vibrant and that TCS is well-positioned to participate as and when companies scale up. Gopinathan said retail could see recovery in the next few quarters.

Of the increase in margins, 50 basis points came from currency gains while the larger portion of 120 basis points came in through operational efficiencies and savings in multiple areas of business. The company reported an operating profit or Ebit (earnings before interest and tax) of Rs 7,660 crore.

Executive vice-president and global head, HR, Ajoy Mukherjee said the company is hiring at junior levels from campuses and also making lateral hires.

“Two years ago we started training everybody in digital and now 250,000 people have been trained. We are able to redeploy them and this is reflecting in our digital revenues which are around 20% of the overall revenues,” Mukherjee said.

The total employee strength of the company at the end of Q2FY18 was 389,213 on a consolidated basis with gross addition of 15,868 and net addition of 3,404 employees during the quarter. The total attrition rate fell to 12.1% including BPS, with IT attrition at 11.3%, down 30 basis points.

Speaking to reporters later, chief financial officer V Ramakrishnan said though sharp swings in the currency movements could have an impact, there is no change in the hedging policy of the company as of now.

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