Business

TCS Q1 profit rises 10.8% to ₹8,131 crore

BFSI segment puts up a strong show

Information technology major Tata Consultancy Services (TCS) kicked-off the earnings season by reporting a 10.8% growth in its first quarter net profit to ₹8,131 crore for the June quarter on the back of a strong performance in its banking, financial services and insurance (BFSI) segment.

The rise in profit came in on a 11.4% growth in revenue to ₹38,172 crore.

Rajesh Gopinathan, chief executive officer and managing director, TCS, said: “We have had a steady start to the new fiscal year. We see customers continuing to spend on their growth and transformation initiatives, and that is showing in our strong order book and deal pipeline this quarter.”

India’s second-most valued firm by market capitalisation saw a 7.5% growth in its operating income to ₹9,220 crore.

However, the company’s margins contracted 90 basis points (bps) to 24.2% in a seasonally strong quarter for the IT industry, thereby raising investors’ concerns on margins.

V. Ramakrishnan, chief financial officer, said: “Our margins this quarter fully reflect the annual increments that we effected across the board in April. Sustained rigour in operations helped deliver strong cash conversion and EPS [earning per share] expansion. We continue to invest in deepening our capabilities to help our customers in their transformation journeys.” The board has recommended a dividend of ₹5 per share.

N. Ganapathy Subramaniam, chief operating officer and executive director, said: “We continue to execute well and delivered some significant transformation programmes to our customers during the quarter. Our platforms for the financial industry are doing well.”

Digital services, which accounted for 32.2% of the revenue, grew at 42.1%. The Life Sciences and Healthcare vertical grew 18.1%, BFSI 9.2%, retail, 7.9%, technology and services, 7.8% and manufacturing, 5.5% during the quarter.

“TCS reported a weak set of Q1 numbers with revenue coming in line with consensus estimate and EBIT margin below estimates. Net profitability came marginally above the consensus estimate,” Paras Bothra, president equities, Ashika Stock Broking, told The Hindu.

Strong hiring trends

Strong hiring in Q1 resulted in a net addition of 12,356 employees, the highest in the last five years.

The company has issued joining letters to over 30,000 fresh graduates, said a company statement, adding that the consolidated headcount stood at 436,641 as of June 30, 2019.

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Printable version | Feb 23, 2020 11:30:17 AM | https://www.thehindu.com/business/tcs-q1-profit-rises-108-to-8131-crore/article28335853.ece

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