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TCS, which reported a 4.5 per cent growth in its consolidated net profit in Q4, saw certain verticals growing in double digits YoY. Growth was led by the Energy & Utilities vertical, which grew 33.7 per cent in the quarter, followed by Travel & Hospitality, which registered a 25.4 per cent growth.
In terms of markets, Continental Europe and UK turned out to be big growth contributors in the fourth quarter.
MD and CEO Rajesh Gopinathan said that increased demand in the region coupled with the company’s ability to package different digital solutions together helped TCS capture new projects in the region. Overall, Continental Europe grew 19.1 per cent, UK grew 10.7 per cent, while the Asia-Pacific market registered a 8.6 per cent growth for the IT services firm. North America, the biggest market for TCS, grew by 4.9% YoY.
Operating margins at 25.4 per cent fell into TCS’ stated targeted band of 25-27 per cent. However, for the full year, operating margins fell short of the target at 24.8 per cent.
“We’re glad to announce we’re back to double digit trajectory on dollar revenue growth, UK has been leading with a strong growth of over 10 per cent year-on-year,” said Gopinathan.
This helped TCS add three new customers in the above-$50 million category during the quarter.
Full-year profit dips
For FY18, TCS saw its net profit dipping 1.7 per cent to ₹25,826 crore, while revenue rose 4.3 per cent to ₹1,23,104 crore.
The IT services attrition rate for TCS fell by 0.1 per cent in the quarter to 11 per cent, while the total attrition rate (including BPS) fell to 11.8 per cent. TCS added 4,118 net new employees in the quarter.
“Post 4QFY18 performance, we are encouraged by renewed traction in TCS’ business,” said Harit Shah, Analyst (IT), Reliance Securities. “Apart from BFSI and retail, other verticals achieved results either in line with or better than the company average growth. The company also issued a bonus of 1:1 which, along with the share buyback, is likely to improve sentiment. Given these factors, we believe the stock will be able to command a higher multiple.”
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