After IT bellwether Infosys surprised the market with a good set of numbers last week, it was the country’s largest software exporter Tata Consultancy Services’ turn on Monday to post a robust set of numbers, fuelling expectations that IT spending by corporates may be rising again.
Beating street expectations, TCS reported a net profit of Rs 3,552 crore during October-December as per IFRS accounting standards, which was up 1.1% sequentially. Revenues during the period were up 2.9% quarter-on-quarter at R16,070 crore. The company’s operating income came in at a robust R4,381 crore, up 4.8% over the September quarter.
Though unlike Infosys, TCS does not provide a guidance, it did say that it would outperform the industry by beating the projections of 11-14% growth by industry association Nasscom.
“We had good revenue growth, balanced across service lines, industries and geographies; our agile, customer-centric organisation is delivering an increasing number of larger and deeper client relationships,” chief executive officer and managing director N Chandrasekaran said.
In dollar terms, TCS reported revenues of $2,948 million for the December quarter, up 3.3% sequentially. Infosys had surprised analysts on Friday by raising its revenue guidance for the current fiscal to $7.45 billion from $7.34 billion earlier.
Infosys stock had closed 17% higher on the BSE on Friday. However, analysts do not expect shares of TCS to surge like Infosys because “the results expectation for Infosys was very low.”
North America, UK and Latin America led the growth for the company in actual terms whereas continental Europe was down 2.4%. North America, UK and Latin America contributed 2.5%, 5.2% and 10.9% respectively to the company's growth. Telecom was down 2.6% this quarter whereas BFSI and manufacturing sectors led to robust growth. “The equipment manufacturers and vendors continue to be under pressure and hence, volumes in this sector have either been muted or volatile,” S Mahalingam, chief financial officer and executive director said.
Despite a dip in its revenues from the Continental Europe, the company is confident that growth from the region would bounce back. “As far as Europe is concerned, calendar year 2013 will be much better than 2012,” Chandrasekaran said, asserting pricing was stable and other regions like the US and UK continued to contribute to growth.
The number of its $100-million plus clients increased to 16 from 14. TCS added a net 9,561 people during the three months to December, taking the firm’s headcount to 2,63,637.
The firm had signed seven large deals during the quarter and its clients in the $100 million increased to 16 during the quarter. TCS also saw a pricing uptick of 1.5% this year. The company has added 31 new clients during the quarter taking its total active client count to 1,051.
Attrition at the IT major came in at its lowest 11.2%. The TCS board has also declared an interim dividend of Rs 3 per equity share of Re 1 each of the company.
Shares of TCS closed 2.14% up at Rs 1,334.3 on the Bombay Stock Exchange on Monday. The results, though were announced after market hours.