Country’s largest software exporter Tata Consultancy Services on Thursday beat the street expectation by announcing 15.5 per cent jump in its consolidated net profit at Rs 3,831 crore for the June quarter.
The company’s total revenue, under Indian IFRS accounting standards, rose 21 per cent to Rs 17,987 crore from Rs 14,869 crore in the corresponding period last fiscal.The company, in a regulatory filing, said operating margin stood at 26.9 per cent while volume grew 6.10 per cent during the reporting quarter.Commenting on the performance, Managing Director and Chief Executive N Chandrasekaran said, “We have delivered another solid quarter, driven by the highest volume growth in the past seven quarters. It has been an all-round performance with strong revenue growth across markets led by the US.
“Our investments in Europe continue to gain strong traction with customers and helped us deliver industry-leading growth this quarter.”He further said the company added two $100 million plus clients during the reporting period.The company’s gross employee addition was 10,611, while the overall employee utilisation rates stood at 82.7 per cent and the attrition rate for IT arm stood at 9.55 per cent, which at the BPO arm was higher 15.77 per cent.
“TCS’s results were above estimates. The highlight was the 6.1 per cent volume growth, a 7 quarter high. Margins improved despite salary hikes, which is creditable. Net profits were higher than what we had estimated,” said Dipen Shah, Head of Private Client Group Research, Kotak Securities while commenting on the TCS result.
“TCS has been reporting above-average volume growth consistently and has been able to sustain margins. This reflects the strong account management and execution capabilities of the company,” Shah added.Chief financial officer Rajesh Gopinathan said, “the current environment demands an agile operating model that can capture diverse growth opportunities. We continue to execute to plan and invest for growth, while maintaining stability in our margin profile.”
However, the domestic market, Chandrasekaran said, was impacted by slower decision cycles and business mix being skewed towards system integration projects. Despite bagging Rs 1,100 crore deal from India Post among others, TCS revenues from domestic market declined about 5 per cent sequentially.
“We have been able to deliver a margin improvement of 50 bps at 26.9 per cent, which is an excellent position to be in because it is a quarter in which you face a huge headwind in terms of wage hikes and we have been able to work on that and show improvement in margins,” he said.