Next fiscal will be a better year, says CEO N. Chandrasekaran

Tata Consultancy Services (TCS), on Wednesday, reported a 48.2 per cent growth in its consolidated net profit at Rs. 5,410 crore for the fourth quarter of 2013-14 aided by growth in digital technologies.

Revenues were up 31.2 per cent at Rs. 21,551 crore. The operating profit stood at Rs. 6,281 crore. And, the operating margin was at an all-time high of 29.1 per cent. Net margin was up 330 basis points at 24.6 per cent.

Addressing a media conference, N.Chandrasekaran, CEO & MD, TCS said, “we have delivered strong growth and strengthened our competitive positioning in the market. We have maintained our momentum, improved our quality of growth, deepened our relationship with customers, and expanded our presence in newer markets like Europe during the past 12 months. Our strategic investments, including those in digital technologies, are providing a compelling value proposition as well as helping us anticipate and shape new market trends successfully.”

Record operating margin

During 2013-14, TCS reported a 37.7 per cent growth in net profit at Rs. 19,164 crore on 30 per cent higher revenues of Rs. 81,809 crore. Operating profit was at Rs. 23,808 crore while operating margin was at a record 29.1 per cent, up 210 basis points.

Volume growth during the year was 17.39 per cent.

TCS announced a total dividend of Rs. 32 per share, including a proposed Rs. 20 as final dividend.

“We have done well during the year. Overall, what clients are telling us, our deal pipeline, order-book and sentiment point to a better FY’15, Mr. Chandrasekaran said. “We are seeing three areas of spending – in simplification, improving discretionary budget towards going digital and in regulatory changes namely governance.” The India business was soft and the third and fourth quarters were flattish, the TCS CEO said, adding “we will be opportunistic and wait and watch. We will see delays in deal closures and this will likely continue till elections are over.”

“But going into FY’15, we believe India will improve. We will have to wait for the first two quarters and are not factoring in big growth in India at this point.’’

Growth in Europe

The company saw growth across markets with Europe leading growth in major markets while UK and North America continue to grow. Rajesh Gopinathan, CFO, TCS said, “our focus has been to stay disciplined in operations while supporting growth across multiple markets, industries and technologies. We enhanced our profitability to industry leading levels despite macro and currency volatility through the year. We are continuously investing to stay ahead of the curve.”

On prospects for 2014-15, Mr. Chandrasekaran said TCS was upbeat that the next 12 months would bring many more opportunities for growth across multiple industries and markets and that growth will be volume-driven.

“Digital will be a very important vertical for us and a growth driver. Growth will also be led by larger verticals like banking & financial services, retail, lifestyle and high-tech industry which will continue to be strong. Smaller sectors like media and utilities will follow.’’

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