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Top 10 takeaways from TCS Q1 results as net profit below estimate

TCS' revenue from digital services stood at 18.9 percent, up 7.6 percent on a sequential basis and 26 percent on a YoY basis.

July 13, 2017 / 08:14 PM IST
Rajesh Gopinathan, CEO, TCS

Rajesh Gopinathan, CEO, TCS

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Tata Consultancy Services (TCS) reported results for the quarter ended June 30 on Thursday which was largely below consensus estimates.

TCS closed 0.2 percent higher at Rs 2446.40 on the NSE. It hit a low of Rs 2426.60 and a high of Rs 2472 in trade today.

“We have seen steady growth across industries in Q1. Robust volumes from major markets driven by good clients additions across revenue bands and accelerating Digital adoption among customers have given us the right start to the year,” Rajesh Gopinathan, CEO, and MD at TCS said in a statement.

We have collated views a list of ten takeaways from TCS June quarter results:

Net profit below estimates:

The net profit during the quarter ended June fell by 10.1 percent on a quarter-on-quarter (QoQ) basis to Rs 5,945 crore which was below CNBC-TV18 analyst poll of Rs6,195 crore.

The IT major reported a net profit of Rs 6,622 crore in the previous quarter and Rs 6,318 crore in the corresponding quarter of last fiscal.

The EBIT or earnings before interest and tax stood at Rs 6,923 crore for the quarter ended June 30 which was lower than a CNBC-TV18 poll of Rs7,155 crore.

Total Revenues:

Total revenue declined 0.2 percent on a QoQ basis to Rs 29,584 crores from Rs 29,642 while rose marginally by about 1 percent on a YoY basis.

Dollar Revenue:

Dollar revenues rose marginally on a QoQ basis to $4591 million compared to CNBC-TV18 poll of $4581 million.

Board declares Interim Dividend:

Tata Consultancy Services Ltd has informed BSE that the Board of Directors of the Company at its meeting held on July 13, 2017, inter alia, has declared an Interim Dividend of Rs. 7 per Equity Share of Re. 1 each of the Company.

Further, the Interim Dividend will be paid to the equity shareholders of the Company on August 01, 2017.

Growth in Digital Revenues:

TCS' revenue from digital services stood at 18.9percent, up 7.6 percent on a sequential basis and 26 percent on a YoY basis. Any increase in digital contribution to overall revenue is a positive sign.

Growth in Global Markets:

All the major markets grew in CC terms with Europe leading the way (5.9% QoQ), followed by North America and UK. Among growth markets, Latin America led the pack at (2.8% QoQ) followed by India, APAC, and MEA.

Growth in Services:

Cognitive business operations saw 5 percent QoQ growth, led by transformation offerings for the back office, cloud adoption, regulatory compliance and TCS platform based services.

Cybersecurity services saw double-digit QoQ growth with strong demand in compliance requirement, privilege access management, and cybersecurity.

IoT-based services saw high client traction with over 20 initial engagements in the areas of Connected Home, Mobility, Energy Management and Remote Monitoring.

Select Key wins in Q1:

TCS added 8 clients in over $1 million bands and 12 clients in over $10 million band for the quarter ended June 30.

Innovation and Intellectual Property:

As of June 30, the company has applied for 3402 patents, including 43 applied during the quarter. Till date, the company has been granted 541 patents.

Human Resource:

The total employee strength at the end of Q1 stood at 385809 on a consolidated basis with gross additions of 11,202 and net additions of (1,414 employees) during the quarter. The total attrition rate (LTM) was at 12.4% including BPS, with IT attrition at only 11.6%. The percentage of women in TCS rose to an all-time high of 34.8 percent.
Kshitij Anand is the Editor Markets at Moneycontrol.
first published: Jul 13, 2017 05:54 pm