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Despite warning for a relatively weak quarter, TCS has managed to deliver reasonably strong set of financials for the March quarter and certainly much better than what Infosys managed, yet again.
But overall, this time around, TCS has not managed the spectacular, broad-based growth that it has done regularly over the past several quarters.
Healthy addition of large-size customers, enhanced revenue traction from the UK and Continental Europe and sustained improvements in utilisation levels were the key positives for the company in the fourth quarter.
Weakness in the telecom segment after a couple of quarters of encouraging growth and tepid growth in the North American geography were dampeners. Many of its verticals too experienced a relatively feeble period.
During the March quarter, TCS’ revenues grew 1.9 per cent sequentially in dollar terms, while net profit rose 2.9 per cent. Infosys’ revenues in contrast fell marginally during the same period.
Key takeaways
TCS managed to a couple of additions in the $100 million customer category, something that did not happen with Infosys. In the $10-20 million bucket, TCS managed as many as 14 additional clients. This is an area where Infosys too scored.
Like with Infosys, Europe led the growth for TCS too with the UK and continent Europe experiencing 2.6-5 per cent growth in revenues.
The North American geography was tepid for both the top-tier players, though both managements have indicated that it may only be near term weakness.
Its key BFSI segment grew at the close to the overall company’s revenue rate, while for Infosys there was a decline.
But the manufacturing and retail verticals witnessed a decline during the quarter for TCS. Many of its smaller segments grew, so overall the company managed a decent show.
Utilisation, at 83.8 per cent, continues to improve and is among the highest in the industry.
Attrition levels
Attrition levels of 11.3 per cent are quite healthy and certainly when compared with Infosys which witnessed a high 18.7 per cent rate.
Though the quarter may not have been the best in recent times for TCS, it has still delivered robust financials and its key segments continue to fire.
It has continued to retain its leadership among top-tier players.
With the management predicting a much better FY15, exceeding industry body Nasscom’s estimated growth rate for the industry of 13-15 per cent might be well be a walk in the park for the company.
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