TCS Q1 net up 10.8% on strong growth in digital, BFSI businesses

Our Bureau Mumbai | Updated on July 09, 2019 Published on July 09, 2019

(left) Rajesh Gopinathan, CEO & MD, TCS and N. Ganapathy Subramaniam, COO & ED announvccing company's results in Mumbai on Tuesday.

Tata Consultancy Services on Tuesday reported 10.8 per cent growth in consolidated net profit to ₹8,131 crore for the quarter-ended June 30 from ₹7,340 crore in the year-ago period.

Revenue of the Tata group company grew 11.4 per cent to ₹38,172 crore in the June quarter, compared to ₹34,261 crore in the year-ago quarter.

Digital revenue accounted for 32.2 per cent of the topline, growing 42.1 per cent in the said quarter. BFSI, the largest vertical for TCS, grew 9.2 per cent year-on-year.

“We have had a steady start to the new fiscal year. We see customers continuing to spend on their growth and transformation initiatives, and that is showing in our strong order book and deal pipeline this quarter,” TCS CEO and MD Rajesh Gopinathan said.

However, operating margin saw a 90 basis point drop at 24.2 per cent against 25.1 per cent in March quarter and 25 per cent in the same quarter last year. Net margin for the quarter was 21.3 per cent. The company said the drop in margins was mostly due to the strengthening of the rupee.

While increased scrutiny on H1B visas has pushed up salary bills for most IT services companies, who are forced to increase their hiring in the US, TCS declined to give details of the cost impact of its hiring in the US nor the number of people it has employed in the US. The company, however, said that it was one of the biggest employers in the US, pointing out that hiring in the US has not had a major impact on the company’s financials.

Overall, TCS said it had issued joining letters to over 30,000 fresh graduates and about 40 per cent of them have been on-boarded in June quarter while the rest are expected to join by September. The company had a net employee addition of 12,356 — the highest in five years — taking the total headcount to 4,36,641.

Among geographies, growth was led by the UK (up 16 per cent), India 15.9 per cent) and Europe (15 per cent). Other markets, too, showed good momentum: North America (up 7.7 per cent), Asia Pacific (9.5 per cent), MEA (6.4 per cent) and Latin America (6.4 per cent).

The earnings per share (EPS) stood at ₹21.67, up 13 per cent year-on-year. The board has recommended a dividend of ₹5 per equity share for the June quarter.

“Our margins this quarter fully reflect the annual increments that we effected across the board in April. Sustained rigour in operations helped deliver strong cash conversion and EPS expansion,” TCS CFO V Ramakrishnan said.


Published on July 09, 2019

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