Mumbai, Jul 15: On the back of strong growth in volumes across segments, IT major TCS on Thursday reported 26.7 per cent rise in the April-June quarter profit at Rs 2,415 crore which market analysts said beat their estimates. The total revenue of the country's biggest software exporter grew by 31.4 per cent to Rs 10,797 crore for the period under review.
However, sequentially the profit has declined as the company had posted Rs 2,623 crore profit in the last quarter of the previous fiscal.
Speaking to reporters, TCS Chief Executive Officer and Managing Director N Chandrasekaran said, “The performance across the board is extremely satisfactory. There has also been a significant growth in volumes by 7.5 per cent.” He said the growth across industries was led by growth in hi-tech, retail, hospitality, telecom and BFSI. Commenting on the earnings, Kotak Securities Senior Vice President (Private Client Group Research) Dipen Shah said, “TCS results were above our estimates. The 7.4 per cent volume growth was the highlight.”
The growth was broad-based, which lends a degree of stability to this growth. “The management is confident about client spending while being cautious on the macro scene,” he further said.
“By focusing and optimising operations to support our growth, we have been able to limit the erosion in operating margins by using various levers like utilisation and productivity,” TCS's Chief Financial Officer and Executive Director S Mahalingam said.
Earlier during the week, IT bellwether Infosys had reported a 15.72 per cent jump in its first quarter profit at Rs 1,722 crore, but had expressed caution on the economic environment, especially in Europe.
On TCS's offshore business, Chandrasekaran said, “All markets, including the USA and Europe grew alongside markets like India and Asia Pacific. We also saw a growth in the emerging markets.”
There was a muted growth in Asia Pacific and Latin America, he said, adding the uncertain global macroeconomic environment demands that we need to be flexible and agile to capture growth opportunities as they emerge. The company signed 10 deals in the quarter with 4 each in UK and Europe and two other in emerging markets. “TCS continues to partner with many customers to help them successfully execute their transformation agendas. Our discretionary spends have also increased due to our offshore focus. We have some more deals in the pipeline,” he said.
On its hiring plans this fiscal, TCS Global Head Human Resources, Ajoy Mukherjee said, “We added a net 3,576 employees during the quarter. We plan to hire 60,000 workers till March 31,” An increase in expenses on employees in the form of pay hike is damping operating margin, he added. The company added 24 new clients during the quarter. “The number of clients in the category of USD 50 million increased to 33 from 27. We will add a few more in the months to come,” he said.
On the rejection rate for visas, Mukherjee said, “The rejection rate is similar to last quarter but on a year-on-year basis, the rejection has gone down. Visa regulations keep changing from region to region depending on the situation. But we will continue to focus on compliance and focus on getting more visas.”
Comparing the results of TCS and Infosys, Angel Broking IT Analyst Srishti Anand said, “TCS has come out with a very strong volume growth of 7.4 per cent much ahead of its peer IT firm Infosys which posted a growth of 4 per cent.”
Another IT firm Wipro will release its quarterly results on July 20. PTI