TCS Q3FY17 net up 11% on-yr to Rs 67.78 billion, as the company looks to grow across all sectors
Tata Consultancy Services Thursday said its net profit for the third quarter of this fiscal year rose 10.9% on-year to Rs 67.78 billion, crossing $1 billion for the first time. India’s largest information technology services company’s revenue in the Oct-Dec quarter rose 8.7% on-year to Rs 297.35 billion, it said. The results were in line with the broader market expectations.
The net profit and revenue rose 2.9% and 1.5% respectively as compared to the previous quarter. The company’s operating profit for the quarter (EBIT) at Rs 77.33 billion was up 1.5% from the previous quarter.
“The resilience of our business model and strength of our operating strategy has been brought to the fore by our performance in Q3, traditionally a quarter of weak demand,” TCS MD and Chief Executive N Chandrasekaran said.
“Our strengths in Digital, Platforms and Cloud as well as our deep knowledge of the customers’ domain are driving our ability to play a strategic role and make a holistic impact on the business,” he said.
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To support and sustain the company’s digital business that is growing at 30% on an annual basis, TCS continues to build new capabilities in digital technologies, empower employees to enhance agility in the workplace and invest more to develop IP-based platforms and products, he added.
While its EBITDA margin at 26% were largely flat on-quarter, the company said it continues to focus on target margin band of 26%-28%.
“Alongside a good growth performance, we have been able to keep profitability stable in our desired range,” Chief Financial Officer Rajesh Gopinathan said.
Further, the company is increasing its focus and services on on new technologies, which are more supportive of the desired pricing and higher realisations, bringing it closer to the higher end of its targeted margin band, Gopinathan added.
TCS said while the company is past the bottom points in its 3-4 troubling areas and is now on a growth curve, it does expect some volatility in emerging markets.
All the industry sectors that TCS serves are doing well and Insurance has also started “rising again”, Chandrasekaran said.
Further, the company’s performance was distributed well across sectors, he said, adding, the company got three deals in banking and two in retail.
However, probable restrictions on US visas remains a concern for the Indian information technology companies, as the US President-elect has repeatedly said he will solve the “immigration problem” and get more jobs for the Americans instead of foreigners.
Chandrasekaran said TCS has begun to address these concerns proactively and it has been making changes to its business models for the last one year, fully aware of the consideration that it will have to operate in a restrictive visa regime.
TCS added two clients in the $50 million band in the quarter, and 10 clients in the $5 million band. The company added 18,362 employees in Oct-Dec, while its attrition in IT services fell to 11.3% in the quarter. It also declared an interim dividend of Rs 6.5 per share.
TCS shares ended up 0.87 per cent at Rs 2343.30 on the BSE before results were released.