TCS net up 5% at Rs 5,444 cr, misses expectations

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Mumbai | Published: January 16, 2015 2:28:39 AM

Tata Consultancy Services (TCS) on Thursday missed Street estimates, posting a 5.1% year-on-year increase...

Tata Consultancy Services (TCS) on Thursday missed Street estimates, posting a 5.1% year-on-year increase in net profit for the quarter ended December 31 to R5,444 crore. On a sequential basis, net profit and revenues rose 2.9% each.

A Bloomberg consensus of the firm’s earnings estimates pegged net profit at R5,454 crore and revenues at R24,532 crore. TCS’ turnover for the December quarter stood at R24,501 crore, up 15.1% over the earlier year.

TCS chief executive and managing director N Chandrasekaran said the firm had seen a growth of 2.3% in prices during the quarter while volumes too had grown. “We did seven large deals across five sectors and the deal pipeline is very strong,” Chandrasekaran said, adding that TCS had bagged one deal worth $100 million and three deals worth over $50 million during the quarter under review.

In dollar terms, revenues grew 14.3% year-on-year to $3.93 billion. Rajesh Gopinath, TCS chief financial officer, said, “Sharp cross-currency movements have impacted dollar revenues, but we continue to manage operations with discipline and rigour while investing in people, capabilities and infrastructure on an ongoing basis.”

The company’s operating margin came in at 27% for the December quarter versus 29.7% in the December 2013 quarter and 26.84% in the September quarter. Its operating profit rose 4.6% over the previous year to R6,624 crore. This represented a 3.6% rise over the sequential quarter.

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“Growth in the third quarter (October-December) was driven by industries like telecom, hi-tech and life sciences,” the company’s earnings statement, issued after market hours on Thursday, said. “Europe led growth, driven by investments made in that market, while North America also grew during the quarter.”

Among emerging markets, Latin America and West Asia and Africa registered strong growth; and global consulting, asset leveraged solutions, infrastructure services and assurance services were some of TCS’ services that did well during the quarter, the company said.

The company added 16,561 employees on a gross basis, and 4,868 employees on a net basis during the December quarter and said that its total hiring in fiscal 2015 was likely to exceed the target of 55,000 employees it had set for itself.

Ajoy Mukherjee, TCS executive vice-president and global head of human resources, said that the company had already hired around 52,500 people during the fiscal and its manpower utilisation rate stood at 86% (excluding trainees).

The TCS share rose 0.7% to close at Rs 2,539.10 on the BSE on Thursday. The bourse’s benchmark Sensex was up 2.7%.

The October-December quarter is a seasonally weak one for Indian IT companies, as it coincides with the holiday season when businesses remain shut in regions like Europe and the Americas, where Indian software firms do a lot of business.

While TCS’ earnings came in below estimates, its competitor Infosys surpassed analysts’ expectations when it announced its third-quarter earnings on January 9 and maintained its full-year sales forecast of 7% to 9% in dollar terms. TCS did not offer any guidance with respect to its full-year earnings for FY15 on Thursday.

With inputs from Bloomberg

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