TCS at record high as Q1 profit beats forecasts

The company's EBITDA and EBIT margin moved up by 29 bp and 50 bp qoq to 28.6% and 27.0% respectively.

Tata Consultancy Services (TCS) is trading higher by nearly 4% at Rs 1,724, also its record high on BSE, after reporting  better- than-expected consolidated net profit at Rs 3,831 crore for the quarter ended June 30, 2013 (Q1 FY2014).

Analysts on an average had expected profit of Rs 3,739 crore from India’s largest software services company. The company had profit of Rs 3,616 crore in March quarter and Rs 3,317 crore in a year ago quarter.

TCS’s consolidated total income from operations grew 9.5% at Rs 17,987 crore on quarter-on-quarter (qoq) basis. The company’s EBITDA and EBIT margin moved up by 29 bp and 50 bp qoq to 28.6% and 27.0%, even when the company had wage hike headwind during the quarter which is commendable.

“Management indicated that they expect CY2013 to be better than CY2012 in terms of IT spending and the company has maintained hiring target of 45,000 gross employees for FY2014 which is encouraging,” says analyst at Angel Broking in a note.

Meanwhile, the board has declared an interim dividend of Rs 4 per equity share of Re 1 each of the company.