TCS beats expectations, net up 9% in ‘uncertain environment’
Tata Consultancy Services, the country’s largest software services exporter, reported a 9% rise in net profit to Rs 6,586 crore during the July-September quarter of 2016-17, compared to the same period last fiscal, in what the company termed was an increasingly uncertain environment.
Tata Consultancy Services, the country’s largest software services exporter, reported a 9% rise in net profit to Rs 6,586 crore during the July-September quarter of 2016-17, compared to the same period last fiscal, in what the company termed was an increasingly uncertain environment. The company beat analyst expectations of net profit of Rs 6,096 crore during the quarter.
Revenue rose 8% to Rs 29,284 crore during the second quarter, against last year. In dollar terms, revenue grew 1% sequentially to $4.37 billion (Rs 29,060 crore).
“It has been an unusual Q2 for TCS. Growing uncertainties in the environment is creating caution among customers and resulted in holdbacks in discretionary spending this quarter,” CEO and MD N Chandrasekaran said.
Additionally, volatility in markets, including India and Latin America, also led to muted revenue growth. he added.
“The company’s 1% revenue growth in constant currency terms was the lowest sequential growth in its reporting history in an otherwise usually strong period,” said analysts at Emkay Global Financial Services.
TCS first warned in September that its financial sector clients were holding back on discretionary spending.
The US is the biggest market for India’s $150-billion software services outsourcing industry, followed by Europe.
Chandrasekaran brushed possibilities of US business being affected even if Republican candidate Donald Trump becomes the president in the upcoming elections in November.
“I don’t see any specific negative impact on spending if Donald Trump comes to power in US,” Chandrasekaran said.
Operating margins rose 94 basis points to 26% during the quarter, compared to the previous one.
On a net basis, TCS added 9,440 employees, taking its total staff strength to 371,519. Its attrition rate was at 12.9%.
Over 180,000 employees have now been trained in new digital technologies, the company said. Digital accounted for 16.1% of its total revenue.
“We continue to hire in line with business demands and engage with our employees to help them learn and equip themselves with new skills to succeed in a digital world,” said Ajoy Mukherjee, global head of human resources.
“We believe the IT sector (including TCS) continues to face a mix of structural and cyclical changes, which is resulting in a very tough fiscal 2017 for the industry as a whole,” the analysts at Emkay said.
TCS shares closed down 2.2% at Rs 2,328.50 on the Bombay Stock Exchange.
The results were announced after markets hours.