Tata Consultancy Services reported a record quarterly profit in the January-March quarter, helped by strong growth across verticals and geographies. The company’s MD and CEO Rajesh Gopinathan remains confident on the momentum, despite macro-economic concerns like the uncertainties around Brexit.
The country’s largest software services exporter said quarterly net profit surged 18 per cent year-on-year to Rs 8,126 crore. Revenue in the fourth quarter rose 19 per cent from a year ago to Rs 38,010 crore.
“In this quarter we have a total contract value of $6.2 billion. This has come from many markets, it has come from Europe, it has come from India, Middle East and from different verticals. Its been a very broad-based one and not just lumped together in North America or BFSI (banking, financial services and insurance). That is one of the big things that gives us the confidence about the momentum that we see,” said Gopinathan.
Revenue growth particularly accelerated in the BFSI segment, surging 11.6 per cent from a year ago, compared with 8.6 per cent growth in the October-December quarter. Other verticals also reported strong growth, with retail and consumer packaged goods clocking near 10 per cent growth and manufacturing recording 9.2 per cent growth. Growth in the life sciences and healthcare vertical stood at 18.2 per cent last quarter, while that in energy and utilities, and communications and media coming in at 11.3 per cent and 10 per cent respectively.
“If you look at where we were last year, we had large segments that were actually dragging on growth, growing at less than 2-3 per cent. Now, we have a much more even portfolio, where almost all the segments are close to the company average,” added Gopinathan.
Despite the uncertainties around Britain’s plan to leave the European Union, growth in the UK market jumped 21.3 per cent and Europe grow 17.5 per cent, which Gopinathan attributed to TCS’ constant focus on the customers and their evolving demands. Other regions too clocked strong growth in the fourth quarter.
“This is a year where TCS has fired on all cylinders. All elements and dimensions of our strategy, all elements of our organisation have worked together and delivered as a team, starting with our Business 4.0 framework, which is our thought leadership framework that is allowing us to participate in the growth and transformation agenda of our customers, going on to areas like the machine first delivery model, investments in Ignio, which has had an outstanding year doubling its customer base to more than 100…,” he said.
The company’s quarterly net margin at 21.4 per cent was down 15 basis points, but for the full year, operating margin rose 79 basis points to 25.6 per cent. V. Ramakrishnan, the company’s chief financial officer, remains confident on the resilience of margins.
“From the margin perspective, we are somewhere close to the lower end of where we want to be (26-28 per cent). All the levers, which have been working, continue to be strong and there is no reason why we should not be confident about continuing to be resilient on our margins,” he said.
TCS shares closed 0.3 per cent lower at Rs 2,013.75 on the BSE on Friday. The earnings were announced after markets closed.
