Country’s largest software exporter on Thursday beat the street estimates by announcing a 10.9 per cent rise in December quarter net profit at Rs6,778 crore on the back of growth in digital and traditional financial sectors, but flagged issues surrounding the H1-B visas in the US as a key headwind going forward.
The Tata Group’s crown jewel had reported a net profit of Rs6,110 crore under the Ind-AS accounting system for the corresponding period last fiscal.
Revenue rose to Rs29,735 crore, up 8.7 per cent over the year-ago period and 1.5 per cent from the preceding September quarter. The net profit growth is up 2.9 per cent on a sequential basis.
In the wake of a new Bill being introduced to regulate visas in the US, which contributes over 65 per cent of its revenues, amid a fear of a rise in protectionist tendencies in the Donald Trump regime, managing director and chief executive N Chandrasekaran acknowledged visas as a potential headwind.
Exuding confidence of maintaining pre-tax margins-- which came in at 26 per cent for the reporting quarter --in the 26-28 per cent target band, he explained that the problem is both on account of the fees for every visa and also the number of visas which companies can get.
Expecting such a move in the future, TCS has applied for only 4,000 visas in 2016 which is far less than 14,000 in the previous year and was granted only a third of those applied for, he said, stressing that it has been able to protect margins in target range despite that.
On the Trump presidency, he said the US presents a “mixed bag” with positives like a rise in GDP and also the president-elect’s focus on pushing local manufacturing, but the visa-related issues are the headwinds.
The results came on a day when its chief N Chandrasekaran was made chairman of the group holding company Tata Sons. He will be succeeded by Rajesh Gopinathan as TCS CEO.
Angel Broking termed the numbers as “slightly better than expected, on the sales and EBIT front, another brokerage Emkay Global said the net is above its estimate but the overall numbers are in line with operational performances supported by higher sales. The net income jump is aided by forex gains.
The market too lapped up the TCS stocks announced after the market hours. The TCS counter jumped 0.9 per cent on the BSE at Rs2,343.30 after touching Rs2,359.75, while the benchmark Sensex closed up 0.4 per cent.