TCS posts robust net growth in first quarter

Tata Consultancy Services (TCS) on Thursday set the tone for the Indian IT industry with robust net and volume growth in the first quarter (April-June) of this fiscal (2015-16).

The global software major reported net profit of Rs.5,709 crore in the quarter under review (Q1), a whopping 48 percent sequential growth from the last quarter (January-March) at Rs.3,858 crore and 12.9 percent year-on-year (YoY) from Rs.5,058 crore in the like period a year ago.

The city-based outsourcing firm said revenue, however, grew 6 percent sequentially to Rs.25,668 crore from Rs.24,220 crore in previous quarter and 16 percent YoY from Rs.22,111 crore in the same period a year ago.

Under the International Financial Reporting Standard (IFRS), net income for the quarter is up 45 percent sequentially to $898 million from $621 million in the last quarter and 6.2 percent YoY from $845 million in the same period a year ago.

Similarly, revenue in dollar terms rose 3.5 percent sequentially to $4.04 billion from the last quarter at $3.9 billion and 9.3 percent YoY from $3.7 billion in the same period a year ago.

"Demand from our core markets like North America and greater traction for digital solutions in key verticals like financial services, retail and life sciences has driven volumes and growth in first quarter," TCS chief executive N. Chandrasekaran told reporters here.

With a healthy 4.8 percent volume growth, operating income grew a massive 70 percent to Rs.6,748 crore, which is up 16 percent YoY and operating margin to a robust 26.3 percent.

"Our in IP (intellectual property) and platforms, digital capabilities and our execution track record give us a strong foundation to capture growth in this fiscal," Chandrasekaran said.

The company is investing heavily to train a lakh (100,000) techies in relevant technologies in view of the strong pipeline and market adoption of digital across industries.

"Our disciplined approach to operations helped maintain operating margins within the stated range despite hedging volatility and the impact of our annual cycle of salary hikes and promotions," the chief financial officer said on the occasion.

The company will continue to focus on optimising cash conversion rates and investing in people and technologies ahead of its business needs.

Strong growth across core markets spanning North America, Britain, Europe, Gulf and Africa and Asia-Pacific region accrued $136-million incremental revenue in the quarter gone-by.

Growth was across industry segments such as retail, life sciences, (banking, financial services and insurance) and telecom.

Asset-leveraged solutions led the growth among service lines followed by infrastructure, assurance and BPS.

In terms of human capital, the company's total headcount has touched 324,935 at the end of quarter (June 30) with gross addition of 20,302 techies. With 15,023 engineers leaving in the quarter, net addition was only 5,279.

"Our utilisation rate has gone up to a high of 86.3 percent, excluding trainees and to 82.9 percent including trainees. Attrition rate, however, was seasonally higher at 15.9 percent, including BPS," human resources global head Ajoy Mukherjee said.

Number of women employees rose to an all-time high of 33.5 percent, while number of nationalities increased to 124.

"Our focus remains on making our techies adept in new technologies, giving them tools to be more productive and building an engaged team of global professionals," Mukherjee added.