TCS on Thursday preported a 45 per cent jump in June quarter net profit at Rs5,568 crore helped by a broadbased revenue growth and one-time impact from a change in depreciation computation.
The city-headquartered company had posted a net profit of Rs3,840 crore under the IGAAP system of accounting for the corresponding period last year.“It has been a very well rounded, broadbased growth across the board,” TCS Chief Executive and Managing Director N Chandrasekaran told reporters in Mumbai after announcing results.
On the outlook front, he said the scenario is panning out as per its expectation and added that he maintains the performance in FY’15 will be better than FY2013-14.He said markets like US, UK, Europe and India helped Tata Consultancy Services (TCS) achieve a 22.9 per cent jump in revenue on to Rs22,111 crore during the reporting quarter.
The Tata group company faced headwinds in the Middle East and Africa market, while among the segments, all execpt insurance, where it faced some trouble, performed well, he said.Chandrasekaran said that while the dip in business from the insurance vertical is nothing to worry about, the company does not expect it the deliver high growth.
The inclusion of India among the high growth markets was a surprise and Chandrasekaran tempered expectations, saying he does not expect domestic revenues to rise so well.In the backdrop of the slew of IT-driven announcements by the new Government, Chandrasekaran said TCS expects some opportunities to arise in the space but will wait for them to show up before changing its stance.
“From a India point of view, we are still cautious. I wouldn’t say that we will start to see high growth,” he said.A change in depreciation methodology had a positive impact of Rs490 crore for the bottomline under IGAAP, its chief financial officer Rajesh Gopinathan said. However, the same under IFRS had a negative impact as the computation methodology differs.The company scrip slipped by 0.84 per cent to Rs2,381.10 a piece on the BSE on Thursday.
On operating margin front, the total margin of the company came in at 26.3 per cent for the reporting period under IFRS, which was down 2.85 per cent as against the preceding March quarter.This was due to a 0.73 per cent impact of rupee appreciation, 0.79 per cent due to the change in depreciation methodology and 2.19 per cent because of a 10 per cent wage hike effected from the reporting quarter onwards, he said. Improvement in operational efficiencies resulted in a positive impact of 0.86 per cent on the operating margin.
“Our comfort range on the margins is between 26 to 28 per cent and it may vary every quarter according to the operating environment,” Chandrasekaran said, adding that the company prefers to invest the excess margins in its strategic initiatives.He conceded that the currency movement will be a “headwind” during the fiscal, but added that the company is fine till there isn’t excessive volatility in the rupee.
During the quarter, the company won seven large deals of over $50 million spread across retail, life sciences and banking sectors, he said, adding that it is at present in talks for eight other similar large value deals.Contrary to its rival Infosys indicating that there are some pressures on the deal pricing front, TCS said the pricing environment is stable, Gopinathan said.
During the reporting quarter, it hired over 15,000 people, while the net hires stood atr 4,967. The attrition rate went up to 12 per cent, but Chandrasekaran said it is always higher during the first quarter owing to resignations to pursue higher studies.Its utilisation level shot up to an all time high of 85.3 per cent excluding the trainees, but TCS does not target a particular level on the utilisation front.