TCS Posts Robust Net, Revenue Growth In Q3

MUMBAI: Beating the street estimates, global software major Tata Consultancy Services (TCS) on Thursday reported robust net profit (10.9 pct) and revenue growth (8.7 pct) for the third quarter of fiscal 2016-17.

"Our net profit grew 10.9 pct to Rs.6,778 crore for the quarter under review (Q3) from Rs.6,110 crore in like period year ago as per the Indian accounting norm," said the firm in a statement here.

Revenue grew 8.7 pct to Rs.29,735 crore for Q3 from Rs.27,364 crore in same period year ago.

Sequentially, net profit grew 2.9 pct from Rs.6,586 crore and revenue 1.5 pct from Rs.29,284 crore in the second quarter under the Indian accounting norm.

Under the International Financial Reporting Standard (FRS), net income grew 7.9 pct to $1,000 ($1 billion) from $926 million in like period year ago and 1.6 pct sequentially from $984 million last quarter.

Gross revenue under IFRS grew 5.8 pct to $4,387 million ($4.4 billion) from $4,145 million ($4.1 billion) in same period last year and fractionally up (0.3 pct) from $4,374 million ($4.37 billion) last quarter.

"Digital revenue accounted for 16.8 pct of total revenue, up 30 pct annually. Sequentially under constant currency (billion), revenue grew 2 pct and volume growth 1 pct," saud the statement.

Operating margin at Rs.7,733 crore ($1.14 billion) is 26 pct of revenue, net margin at Rs.6,778 crore ($1 billion) 22.8 pct of revenue and cash flow at Rs.7,957 crore ($1.12 billion) is 26.8 pct.

"The resilience of our business model and strength of our operating strategy has been brought to the fore by our performance in Q3, traditionally a quarter of weak demand," said TCS Chief Executive N. Chandrasekaran.

The firm will continue building new capabilities in digital technologies, empower employees and invest more to develop IP-based platforms and products, as the digital business grew 30 pct on annual basis, he said.

"Our strengths in digital, platforms, cloud and knowledge of the customers's domain are driving our ability to play a strategic role and make a holistic impact on the business," he added.

"As digital adoption increases in 2017, we are well prepared to lead this change," added the outgoing Chief Executive.

Clients in $50 million revenue band increased by two and in $10 million by 5.

"We have shown great discipline and control at all levels to deliver another credible quarter. Besides, a good growth performance, we have been able to keep profitability stable in our desired range and deliver over $1 billion in free cash flow during the quarter," said Chief Financial Officer Rajesh Gopinathan.

The revenue growth sequentially was led by Energy & Utilities (5.8 pct), Hi-Tech (2.6 pct), BFSI and Manufacturing (2.1 pct) and Retail (1.9 pct) in constant currency.

In terms of geographies, emerging markets like Latin America and India clocked double digit growth of 12.5 pct and 10.3 pct sequentially, while North America grew 2.2 pct and Britain 1.7 pct.

The company applied for 3,161 patents till December 31, including 80 in Q3 and was granted 440 patents.

Though the company hired 18,362 new people, net addition was only 6,978 due to exit of 11,384 techies during the quarter, taking the total headcount to 378,497.

The attrition rate declined to 11.3 pct in IT services and was at 12.2 pct overall.

"Our retention rates continue to rise as we remain engaged with our employees to help them succeed in a digital world," added Human Resources Global Head Ajoy Mukherjee.

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