TCS Q3 profit surges 50%, beats estimates

IT services major Tata Consultancy Services on Thursday posted a better than expected growth of 50.3 per cent in consolidated net profit at Rs 5,333 crore (Rs 53.33 billion) for the third quarter ended December 31, aided by sectors like life sciences, manufacturing and improved business in Europe.

The country's largest software services exporter had reported a net profit of Rs 3,550 crore (Rs 35.50 billion) in the year-ago period, as per a BSE filing citing Indian GAAP figures.

Net profit as per Indian IFRS rose by nearly 50 per cent to Rs 5,314 crore in the third quarter as against Rs 3,549.62 crore (Rs 35.49 billion) in the corresponding period in the previous year.

Consolidated revenues of the city-based firm rose by 32.5 per cent to Rs 21,294 crore (Rs 212.94 billion) in the October-December quarter this fiscal compared to Rs 16,070 crore (Rs 160.70 billion) in the same quarter of 2012-13 fiscal.

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TCS Chief Executive Officer and Managing Director N Chandrasekaran described the quarter as a "very good one".

Quarter-on-quarter (q-o-q) in rupee terms, TCS net profit rose by 15.1 per cent and revenues were up by 1.5 per cent. "Strong international demand for our services and

discipline in execution has helped TCS maintain its momentum and post robust growth in volumes as well as realisation," Chandrasekaran said.

He said the company signed eight large deals in the quarter but was not so optimistic about the domestic market till June or September.

He also described the margins above their estimate of 27 per cent and attributed the good numbers to lower forex losses.

International business grew by 3.8 per cent in dollar terms, he said, adding that attrition stood at 10.9 per cent during the quarter.

The diversified market presence and services portfolio has helped the company overcome seasonal weakness and soft demand in the Indian market, he added.

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Buoyed by the results, TCS also increased its hiring target for 2013-14 fiscal by 5,000 to 55,000.

In US dollar terms, net income rose by 31.7 per cent to $858 million in the third quarter of the current fiscal against $652 million in previous fiscal, while revenues were up by 17 per cent to $3.44 billion against $2.95 billion during the same period.

Sequentially in dollar terms, net profit rose by 14.7 per cent and revenues were up by 3 per cent.

"Growth in Q3 was driven by industries like Life Science & Healthcare, Manufacturing, Media, Travel & Hospitality and Telecom.

The company's broad based presence across markets and services helped overcome seasonal weakness in some markets. Europe led growth, driven by the continuous investments being made in that market, while North America and UK also grew during the quarter," TCS CFO Rajesh Gopinathan said. 

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Among growth markets, Latin America, APAC and MEA registered strong growth. India business suffered from volatility and declined sequentially. Among service lines, Business Process Services, Enterprise Solutions, Global Consulting were the leaders, he added.

The company added two clients in $50 million category and four in the $20 million.

TCS said it continued to hire to support business growth. There was a total gross addition of 14,663 people (net addition of 5,463 employees) taking total employee strength to 290,713 as of December 31, 2013.

"To support business growth, we have increased our hiring target by a further 5,000 employees for the current financial year to 55,000 professionals," TCS Executive vice president and Global Head Human Resources Ajoy Mukherjee said.