1. TCS Q4 numbers good, digital future better

TCS Q4 numbers good, digital future better

Results driven by volume-led growth; operating margin dips

By: | New Delhi | Published: April 19, 2016 6:56 AM
CEO and managing director Natarajan Chandrasekaran said at a media interaction that while the exit rate for the firm in constant currency terms may have been lower in Q4, the headwinds facing the business had receded and that the current year should be a good one. (AP) CEO and managing director Natarajan Chandrasekaran said at a media interaction that while the exit rate for the firm in constant currency terms may have been lower in Q4, the headwinds facing the business had receded and that the current year should be a good one. (AP)

Tata Consultancy Services on Monday reported a good set of numbers for the three months to March, with dollar revenues clocking in a sequential growth of 1.5%. The IT major, however, reported a slight dip in operating profit margins of about 54 basis points to 26.1%. The revenues in rupee terms at Rs 28,449 crore, a rise of 4% sequentially, beat the Street’s expectations. Net profit was higher by 3.8% quarter-on-quarter at Rs 6,341 crore.

CEO and managing director Natarajan Chandrasekaran said at a media interaction that while the exit rate for the firm in constant currency terms may have been lower in Q4, the headwinds facing the business had receded and that the current year should be a good one. “We are in a better position than we were six months ago,” Chandrasekaran observed.

TCS’ digital business is gaining momentum and accounted for 15.5% of revenues in Q4FY16, growing at 52.2% in FY16. “The digital theme is picking up pace, whether its cloud or analytics, and we expect it to become main street,” the CEO said.

Commenting on the $980-million fine imposed on the firm by the Madison district court in the case filed by Epic — a Verona-based electronic medical records vendor — he said the company was “in touch with those we need to be in touch with”.

“We don’t have an issue,” Chandrasekaran said. TCS nevertheless plans to provide for the entire amount as a contingent liability.

The management attributed the good Q4FY16 numbers to volume-led growth in the BFSI space as also a good performance in key markets like continental Europe and North America. The insurance vertical has turned around while Diligenta is more or less close to a bottom.

“While the Latin American market has reported good growth momentum in the last two quarters, the energy segment has done well in the current quarter,” the CEO observed. He indicated, however, that the business in Japan could take a while to turn around although a fall in revenues from the region was not expected.

While announcing gross hires of 45,000, Chandrasekaran observed that lateral hiring this year would be significantly lower. One reason for this is the lower attrition of 15.5%.

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