Info-tech

TCS net profit surges 37% in Q1

Our Bureau Mumbai | Updated on March 12, 2018 Published on July 12, 2012

Scorecard: Mr N. Chandrasekaran (left), Chief ExecutiveOfficer and Managing Director, Tata Consultancy Services, andMr S. Mahalingam, Chief Financial Officer and ExecutiveDirector, announcing the company’s results in Mumbai onThursday. — Shashi Ashiwal

Growth aided by rupee depreciation, segment revenues

Tata Consultancy Services reported a 37 per cent surge in net profit at Rs 3,317.68 crore at the end of June 2012 quarter against the year-ago period. This growth was aided by the rupee depreciation and growth in the banking, financial services and insurance and retail segments.

On a sequential basis, net profit grew 14.6 per cent from Rs 2,894.93 crore at the end of the March 2012 quarter.

Revenues increased to Rs 14,868.71 crore in the June 2012 quarter from Rs 10,797.02 crore in the corresponding period last year.

Operating margins stood at 27.5 per cent. Mr N Chandrasekaran, Chief Executive Officer and Managing Director, TCS, said, “This has been a quarter where we have had a huge benefit due to the rupee depreciation. There were three headwinds that we faced during the quarter, with average wage hikes, cost of recruiting people and the hike in the visa fees’’. Despite these issues, the CEO said the company had not cut growth and delivered flat margins’’.

He went on to add that the positive effect of the depreciating rupee on the company’s profits was 2.7 per cent. The company continues to maintain that they will be able to deliver ahead of Nasscom estimates of 8-12 per cent, at a certain currency level.

“Looking ahead, TCS continues to see good demand from global corporations as they successfully navigate an increasingly complex environment,” added Mr Chandrasekaran.

TCS has registered a 12 per cent increase in growth in North America, while growth in Europe increased by 9.7 per cent. Latin America, on the other hand, grew by 18.6 per cent on a quarter-on-quarter basis. However, growth in India declined by 7 per cent on a constant currency basis. The nature of the market and the volatility associated with it led to this de-growth, the company said.

The IT major added 29 new clients during the quarter. Though it recorded a one per cent drop in pricing, company officials said the drop was nothing unusual.

The CEO said the company would continue to make new investments and had recorded growth in several engagements, in Mobility, Big Data and Social Media among others.

Mr Dipen Shah, Head of Research, Kotak Securities, said “The volume growth at 5.3 per cent was higher than that reported by Infosys. Average realisations moderated by about 1.3 per cent, indicating some pressure from clients. The management has maintained its optimistic outlook despite the uncertain macro scene and in contrast to cautious comments from Infosys. The comments likely reflect good visibility from large accounts and also better execution.”

The company scrip was down by 1.80 per cent to close at Rs 1,236.10 on the BSE on Thursday.

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Published on July 12, 2012
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