TCS Q1 net profit rises 10.7%, beats estimates

That compares with the Rs6,060 crore average of analyst estimates compiled by Bloomberg.

In dollar terms, net income stood at $ 944 million for the quarter under the Indian Accounting standards, or Rs 32.06 a share. The operating margin stood at 25.1% while operating profit was registered at Rs.7,347 crore. For Europe, this was the best quarter in over a year.

“Strong execution and accelerating customer adoption of cloud, big data and analytics have driven broad-based growth across key markets and industries”, said TCS Chief Executive N. Chandrasekaran in a statement here.

Revenue of the company grew by 3.01 per cent on quarter-on-quarter basis and 14.17 per cent on year-on-year basis.

India has become a back office to the world as companies, especially in developed nations, have subcontracted work to firms such as TCS, taking advantage of the country’s skilled English-speaking workforce.

“Europe, excluding England, clipped at 2.8 per cent, against 2.5 per cent growth that North America saw”.

“We believe TCS’s lower constant currency growth of 3.1% in the first quarter implies sub-10% growth for FY17 in constant currency terms with added risk from Brexit in banking, financial services and insurance (41% of revenue)”, said Sandip Agarwal of Edelweiss Securities. “This is paying off with over 165,000 TCSers now trained with significant expertise in new Digital technologies that are rooted in specific domains”.

Mr Chandrasekaran added: “Our rising employee retention rates for three consecutive quarters reflects our focus on engagement and investments we have made to build strong digital talent base”.

“This has been a quarter of good financial performance balancing revenue growth, profitability and cash generation”.

“Also, the 120bps of the operational efficiency gain in margins does not appear to be sustainable going ahead as most of the levers like utilization (at peak level when last reported) and attrition (lowest in last eight quarters) have already been utilized”, said Singhal. “Also, we had the best year in India at a growth of 8.5 per cent”, he said.