Tata Consultancy Services (TCS) posted net profit of Rs 5,945 crore for the first quarter of the current fiscal, registering a decline of 5.9% from Rs 6,608 crore in the previous quarter of the last fiscal, said the IT bellwether on Thursday.
The decline is 10% compared to Rs 6,317 crore same quarter year ago.
In a regulatory filing on the BSE after trading on the bourses, the software major said revenue for the quarter under review (Q1), however, remained flat sequentially (0.2%) at Rs 29,584 crore as against Rs 29,642 crore in the last quarter but up 1% year-on-year (YoY) from Rs 29,305 crore in same period year ago.
Under the International Financial Regulatory Standard (IFRS) or in dollar terms too, net income declined 7% sequentially to $924 million in the quarter under review (Q1) from $994 million quarter ago and 1.8% from $940 million year ago.
Revenue, however, increased 3.1% sequentially to $4,591 million in Q1 from $4,452 million quarter ago and 5.2% YoY from $4,362 million in same period year ago.
“Operating margin for the quarter was 23.4%, while net cash from operations grew 104% of net profit,” said the city-based IT major in a statement here.
Demand from major markets led to 3.1% growth in dollar terms, while volume growth was 3.5%.
“Strong deal closures in the first quarter signal annual momentum,” asserted the company in the statement.
Earnings Per Share (EPS) was Rs 30.40 for the quarter under review.
The company declared an interim dividend of Rs 7 per equity share of Re 1 each.
“The interim dividend will be paid to the shareholders on August 1,” added the statement.
The company’s blue chip scrip closed at Rs 2,444.05 per share, gaining Rs 4.95 (0.22%) over Wednesday’s closing price of Rs 2,439.10 after opening at Rs 2,449.90 and trading at a high of Rs 2,471 and a low of Rs 2,427.10 during the intra-day session on the BSE.
“We have seen steady growth across industries in Q1. Robust volumes from major markets driven by good client additions across revenue bands and accelerating digital adoption among customers have given us the right start to the year,” said TCS Chief Executive Rajesh Gopinathan at a news conference later.
Digital business accounted for 18.9% of the revenue, growing at 7.6% quarterly and 26% annually.
“We had excellent wins across markets and have a good deal pipeline across industries that positions us well for growth in the current fiscal (FY2018),” said Gopinathan.
The outsourcing major added one client in the $50-100 million rate, 12 in $10 million rate and 8 in $ million during the quarter.
“As we go through the early stages of Business 4.0, enterprises are reimagining as leaner, responsive data-centric organisations by embracing Agile, Cloud, Analytics and Automation. We have re-tooled our structures and go-to-market teams and introduced new service lines like Cognitive Business Operations and Digital Transformation to capture new opportunities,” added Gopinathan.
Chief Operating Officer N. Ganapathy Subramaniam said holistic growth across industry segments, a strong order pipeline and closure of large platform-based transformation opportunities gave us the confidence that overall growth momentum would increase in the coming quarters.
“Though currency volatility, including sharp rupee appreciation against the US dollar during the quarter resulted in Rs 650-crore loss in reported revenues, we remained disciplined in our financial management, focused on generating strong cash flows and invested in our digital business,” said Chief Financial Officer V. Ramakrishnan in the statement.
As 82% of the company’s revenue comes from major markets like Americas, Britain, Europe and Australia, its annuity-based income is less volatile to currency fluctuation.
On the human resource front, though the company hired 11,202 people during the quarter, net addition was 9,788, as 1,414 techies left, resulting in the total headcount decline sequentially to 385,809 by June 30 from 387,223 on March 31.
IT attrition rate, however, remained flat sequentially at 11.6% as against 11.5% quarter ago. Women employees accounted for 34.8% and the number of nationalities increased to 134 from 130 quarter ago.
“We continue to hire talent across markets and help TCSers gain new digital skills so they can participate in the digital economy,” said human resources global head Ajoy Mukherjee on the occasion.
In a related development, the company clarified that it was consolidating its Uttar Pradesh operations at Noida and there would be no job loss due to closure of its operations in the northern state’s capital Lucknow.
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