Tata Consultancy Services, the country's largest IT services provider, on Thursday said its third quarter (October-December) profit increased 2.9 percent sequentially to Rs 6,778 crore, driven by the strong digital business and great execution work. It touched USD 1 billion-mark in profit for the first time.
Revenue during the quarter increased 1.5 percent to Rs 29,735 crore and dollar revenue growth was 0.3 percent at Rs 4,387 crore compared with previous quarter.
Constant currency revenue growth for the quarter was at 2 percent with volume growth of 1 percent on sequential basis.
"The resilience of business model and strength of operating strategy has been brought to the fore by performance in Q3, traditionally a quarter of weak demand," N Chandrasekaran, MD & CEO said, who expects Q4 to follow normal trend.
Overall numbers matched analysts' expectations. Profit was estimated at Rs 6,489 crore (down 1.5 percent QoQ) and revenue at Rs 29,577 crore (up 1 percent) in Q3, according to average of estimates of analysts polled by CNBC-TV18. Dollar revenue growth was expected at only 0.2 percent and constant-currency revenue growth at around 1-1.5 percent compared with previous quarter.
Other income, which also supported profitability, increased by 12.77 percent or by Rs 135 crore to Rs 1,192 crore QoQ.
Digital business registered a 30.2 percent growth on year-on-year basis, TCS said. Its contribution to total revenue increased to 16.8 percent in December quarter from 16.1 percent in September quarter and 15.9 percent in June quarter.
"To support and sustain digital business, we continue to build new capabilities in digital technologies, empower employees to enhance agility in workplace and invest more to develop IP-based platforms and products," Chandrasekaran said.
On the H1-B Visa Reform Bill reintroduced in the US Congress last week, he said there would be some visa regulatory changes and there could be regulations in the form of increase in visa fee or in the form of number of visa that IT companies will get but the company has been preparing well if the number of visas decline.
In Q3, growth was led by energy & utilities segment (up 5.8 percent QoQ), hi-tech (up 2.6 percent), BFSI (up 2.1 percent), manufacturing (up 2.1 percent) and retail (1.9 percent) in constant currency.
"From a geography perspective, business from emerging markets like Latin America and India clocked double digit growth of 12.5 percent and 10.3 percent sequentially, respectively while North America grew 2.2 percent and UK showed 1.7 percent growth quarter-on-quarter," TCS said.
Infrastructure services showed 9.5 percent sequential growth and engineering & industrial services 3.1 percent in the quarter ended December 2016. "Strength in growing segments like Platforms, Cloud and Internet of Things is evident from the growth in Asset Leveraged Solutions (up 21 percent sequentially)," the IT major said.
Operating income during the quarter grew by 1.5 percent to Rs 7,733 crore and margin remained stable at 26 percent compared with previous quarter.
TCS has added 2 clients in USD 50 million revenue category and 5 clients in USD 10 million category.
Its attrition rate for the quarter fell to 11.3 percent (last twelve months) in IT services business, which has been lower for fifth consecutive quarter.
The company has received 440 patents till date. As of December 2016, it has applied for 3,161 patents, including 80 applied during the quarter.
TCS said total employee strength at end of Q3FY17 was 3.78 lakh on a consolidated basis with gross addition of 18,362 and net addition of 6,978 employees.
It has declared dividend of Rs 6.50 per share that will be paid on February 1.
The share price of Tata Consultancy Services, which announced earnings after market hours, closed at Rs 2,343.30, up 0.87 percent on the BSE.