Moneycontrol Presented by Motilal Oswal
Days hours minutes
Nerolac
Presented by :

Co-Presenting Sponsor :

Capital Trade

Powered by :

Godrej Properties

Associate Sponsors :

Aegon Life
LIC Housing Finance
Indiabulls

Co-Presenting Sponsor

Capital Trade

Associate Sponsors

  • Indiabulls
  • Aegon Life
  • Image 3
Jan 12, 2018 08:02 AM IST | Source: Moneycontrol.com

No big bang opening for TCS on Friday; top 10 takeaways from December quarter results

Three clients added to over USD 50 million band, 7 clients got added to over USD 20 million band, 9 clients were added in the USD 10 million band and 15 clients were added in the USD 5 million band.

Kshitij Anand @kshanand

For the December quarter, which was considered a seasonally weak quarter for the IT sector, Tata Consultancy Services (TCS) posted stable results, helped by strong deal wins and digital demand.

Ahead of the results, the stock closed 0.5 percent lower at Rs 2,790. It hit a low of Rs 2,782.20, and a 52-week high of Rs 2,821.90 on the NSE on Thursday. The stock is unlikely to see a big bang opening when it opens for trading on Friday as results were largely in-line with estimates.

"The stock is already trading at record highs so commenting on the opening will be tough based on Q3 results. It could open marginally lower or slightly higher, but we expect TCS to give 8-10 percent return in the next 2-3 months," AK Prabhakar, HoR, IDBI Capital told Moneycontrol.

“We wrapped up 2017 with a strong performance in the December quarter, marked by the signing of industry-defining deals, robust client metrics and broad-based demand across industrial verticals,” Rajesh Gopinathan, CEO, and MD at TCS said in the press release.

We have collated top ten takeaways from TCS Q3 results:

Net Profit

India’s largest software services exporter reported a net profit of Rs 6,531 crore for the quarter ended December which was slightly higher than CNBC-TV18 estimates of Rs6,460 crore. The net profit rose 1.3 percent on a quarter-on-quarter (QoQ) basis while slipped by about 4 percent on a year-on-year (YoY) basis.

Revenue

The dollar revenue rose 1 percent on a QoQ basis to USD 4,787 million, and 9.1 percent on a YoY basis. The dollar revenue was largely in line with CNBC-TV18 estimates of USD 4,781 million.

Revenue in rupee terms grew by 1.2 percent to Rs 30,904 crore and dollar revenue rose 1 percent to USD 4,787 million compared to September quarter.

Strong Volume Growth for Q3

Constant currency revenue growth for the quarter came in at 1.3 percent QoQ and 6.2 percent on a YoY basis, which was lower than 1.7 percent growth in the previous quarter and 2 percent in year-ago.

“The results were largely in-line with estimates but the CC growth of 1.7 percent is slightly lower as we were factoring 1.5 percent QoQ growth. The EBIT margin also came 10 bps lower than what we were expecting,” Urmil Shah of IDBI Capital told CNBC-TV18.

Revenue growth was driven by manufacturing, retail & consumer business, CMT and others; but impacted by lower banking, financial services, and insurance business.

TCS has registered strongest sequential volume growth of 1.6 percent for December quarter in three years.

Digital comes of age

The digital revenue came at 22.1 percent of total revenues, up 39.6 percent on a YoY basis and 13.9 percent on a QoQ basis in constant currency terms. Experience Intelligence and Humanizing Machine First World were two key themes behind marquee wins, TCS said in the release.

"We had a very good quarter marked by excellent operating metrics all across," said chief operating officer Ganapathy Subramaniam in a media statement.

"New deal ramp-ups, increasing traction in digital, robust demand pick up in retail and continuing momentum in most of our industry verticals gave us strong volume growth in a seasonally weak quarter," he added.

Apurva Prasad of HDFC Securities said TCS results were largely in line with estimates.” We were working with a number of 1.3 percent revenue growth in CC terms and the margins were also in line around 25 percent. The key factor is the digital which saw a growth of nearly 40 percent,” he said.

The digital expansion is critical for TCS – the leader in this space are Accenture and Cognizant, said Moshe Katri, MD, Wedbush Securities.

Dividend

The Board of Directors have declared a third interim dividend of Rs.7 per equity share of Re.1 each of the Company. The Third Interim Dividend will be paid to the equity shareholders of the Company on Wednesday, January 31, 2018.

Change in Directorate

Pursuant to Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, this is to inform you that the Board of Directors at its meeting held today has, based on the recommendations of the Nomination and Remuneration Committee, appointed Dr. Pradeep Kumar Khosla as an Additional and Independent Director with effect from January 11, 2018.

Segment Revenue

Most industry verticals grew above the company average in Q3. The retail and CPG vertical showed a strong turn around growing 6.4 percent on a QoQ basis. The growth was led by Energy and Utilities rising by 8.5 percent on a QoQ basis, Travel and Hospitality rose 2.9 percent QoQ and Life Insurance & healthcare grew by 2.5 percent QoQ.

On a YoY basis, all industry verticals – with exception of BFSI and retail grew above 9.5 percent, with 4 vertical growing in double digits on a YoY basis.

Growth in Global Markets

Growth was led by Latin America, up 5 percent QoQ, followed by Continental Europe, 2.6 percent QoQ, and North America, 1.5 percent QoQ. On YoY basis, Continental Europe (22.3 percent), UK (8.2 percent), and India (4.1 percent) performed very well. North America grew by 2.8 percent YoY.

Deal Wins

Three clients added to over USD 50 million band, 7 clients got added to over USD 20 million band, 9 clients were added in the USD 10 million band and 15 clients were added in the USD 5 million band.

Human Resource

Total Employee strength at the end of Q3 stood at 390,880 on a consolidated basis, with gross additions of 12,534 employees and net additions of 1,667 employees during the quarter.

tags #Results

Sections
Follow us on
Available On