IT bellwether Tata Consultancy Services (TCS) has posted a 23.7 per cent increase in consolidated net profit for the first quarter at ₹7,362 crore, buoyed by overall growth and a revival in the BFSI segment. The company was also helped by a rise in operating income and other income.

TCS had posted a net profit of ₹5,950 crore in the year-ago period.

During the reporting quarter, the total income of the Tata group’s flagship company rose 16.18 per cent to ₹35,486 crore (₹30,543 crore). “We are starting the new fiscal year on a strong note, with the growth engine firing on all cylinders. Our banking vertical recovered very nicely this quarter, while other industry verticals maintained their momentum. With a good set of wins during the quarter, a robust deal pipeline and accelerating digital demand, we are positioned well for the future,” said Rajesh Gopinathan, CEO and Managing Director, TCS.

On a constant-currency basis, the company’s banking, financial services and insurance (BFSI) vertical grew 4.1 per cent. North America, led by the US, which is the company’s largest operational and income geography, grew 7 per cent from the year-ago quarter. The company’s digital revenue rose 44.8 per cent on a year-on-year basis, now providing 25 per cent of the revenue mix.

“On a larger scale, I would say TCS needs to improve the digital share of its revenue which has been growing fast. I am benchmarking this with MNCs such as IBM, where 50 per cent of their revenue comes from digital sources,” said DD Mishra, Research Director at Gartner.

The company added two new clients in the $100-million band and 13 clients in the $5-million band during the quarter. TCS’ total employee strength stood at 4,00,875, while IT services attrition stood at 10.9 per cent (last 12 months).

“It has been an excellent quarter, with broad-based growth across all segments and good client additions. We are seeing strong demand in areas like cloud transformation, cyber-security and data privacy, and automation. Our investments in forward-thinking doctrines like the Machine First Delivery Model (MFDM) and Location-independent Agile are giving customers immediate, measurable business benefits and speed to market,” said N Ganapathy Subramaniam, TCS’ Chief Operating Officer & Executive Director.

TCS shares closed 0.56 per cent up at ₹1,877 on a steady BSE, which ended up 0.85 per cent on Tuesday. “We believe the strong quarterly performance would support the current valuations of the company and further upside would largely be function of outlook on BFSI clients that may lead to earnings upgrade. In the previous quarter, the company said this will take a couple of quarters for recovery; any optimism here can be a crucial determinant,” said analysts at Emkay Global.

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