Tata Consultancy Services posted a 26.65 per cent rise in net profit at Rs 3,550 crore, beating street expectations in the seasonally weak third quarter. The country’s largest software exporter posted a net profit of Rs 2,803 crore for the same quarter of the previous financial year.
“We have had an excellent quarter of well-rounded performance, that too during a traditionally weak quarter. Operationally, this has been an excellent quarter, with deal closures being very good and pipeline being strong,” TCS Chief Executive Officer and Managing Director N. Chandrasekaran said.
During the three-month period ended December, revenues rose 21.7 per cent to Rs 16,070 crore from Rs 13,204 crore recorded during the same period a year ago.
The quarter ended December 31, had fewer number of working days due to the festival season and furloughs, which have begun impacting the financial services sector too, Chandrasekaran said, adding, “execution is important in a quarter like this, and we saw excellent productivity”.
(Furlough is temporary unpaid leave given to some employees due to special needs of a company, which may be due to lull economic conditions, among others.)
Said Rikesh Parikh, Vice-President (Markets Strategy and Equities), Motilal Oswal Securities: “The net profit is higher due to other income of $2.2 billion against our estimates of $1.6 billion. If this is excluded, then the numbers are in line with our expectations. The numbers are lower compared to Infosys on volume growth front; however, margins on constant currency are better.”
On the International Financial Reporting Standards (IFRS) basis, the Tata group company posted a 23 per cent rise in quarterly profit of Rs 3,552 crore (Rs 2,887 crore). “TCS revenues came in line with estimates. While volume growth was relatively subdued at 1.25 per cent, average realisation surprised with a growth of about 1.3 per cent. The margin performance was better than what we had estimated it to be,” Dipen Shah, Head of Private Client Group Research at Kotak Securities said.
The Tata group company is also expecting to outdo Nasscom estimates for the year.
Chandrasekaran said that “the momentum is very good as we go to Q4 and then the first quarter of next fiscal.”
Nasscom had provided an outlook for the industry to grow at 11-14 per cent for the year ending in March.
On Monday, ahead of the results, TCS’ share closed up 2.14 per cent at Rs 1,334.30 on the Bombay Stock Exchange.