TCS beats estimates with sterling results, confident

Jul 19 2013, 05:30 IST
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SummaryTata Consultancy Services (TCS) on Thursday beat the Street with a sterling set of numbers reporting a profit after tax for the three months to June of R3,796 crore, an increase of 5.5% on a quarterly basis.

Tata Consultancy Services (TCS) on Thursday beat the Street with a sterling set of numbers reporting a profit after tax for the three months to June of R3,796 crore, an increase of 5.5% on a quarterly basis. India’s biggest software services exporter turned in revenues of R17,987 crore, an increase of 9.5% sequentially, driven up by higher volumes of 6.1%. Dollar revenues rose a strong 4.1 % over the March 2013 quarter to $3.17 billion. Ebit (earnings before interest and tax) margins came in at a robust 27%, an expansion of 50 basis points.

N Chandrasekaran, CEO and managing director, TCS, told newspersons the environment was good, allowing the company 10 large wins during the June quarter including two deals of $100 million each. “All markets have grown, with the US clocking above 6%, and several sectors like telecom have clocked double-digit growth. The deal pipeline is healthy and this is not true only in the US,” the TCS chief said, adding that TCS remains positive about the rest of the year hoping to grow above Nasscom estimates for the industry.

Chandrasekaran said there had been no concerns from clients regarding the impact of the US Immigration Bill. “You are seeing regulatory changes or discussions and dialogue but

there is no impact on client spends, they understand the environment,”he said.

Pointing out that the US Bill was an important legislation and that there could be a similar situation in other nations, he said the company had to be respective of such situations.

“This is the reality and we will engage in the process and see what changes we need to make to our business model,” Chandrasekaran said, pointing out that there was no finality yet and that one would have to wait and take action appropriately. “There are several levers and we need to use them,” he said.

The TCS MD pointed out that the company had been able to deliver a margin improvement of 50 basis points in a quarter when it had taken a significant wage hike and also seen a negative swing of Rs 200 crore thanks to currency fluctuations. “We will stay disciplined as far as pricing is concerned and make the necessary investments ,” he said, adding that the company would like to operate at a margin of around 27%.

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