TCS Puts up a Stellar Show

The IT bellwether’s results were driven by banking and financial services, retail and manufacturing sectors
TCS Puts up a Stellar Show

CHENNAI: Tata Consultancy Services  (TCS) has reported  an impressive 64.35 per cent net profit growth for the quarter ended March 31, 2016, at Rs 6,341.2 crore as against Rs 3,858.2 crore for the same period last year.

India’s largest software exporter TCS has beaten market expectations after several consecutive quarters of falling short. The positive news came amidst a below par day for the company at bourses, stocks falling 2.93% to Rs 2,449 at BSE to recover  to close at Rs 2,522.40, a marginal fall of 0.03%.

Analysts say that the numbers are good news for TCS and the IT industry, especially since it is facing alleged harassment from various US agencies, like many Indian IT firms in the US.

The software company’s impressive numbers (see box), were driven by banking and financial services(BFSI), retail and manufacturing sectors, have seen revenues jump by 17.45% to Rs 28,448.6 crore for the quarter as against last year. “Our core portfolio performed strongly in a seasonally weak fourth quarter driven by strong volumes led by growth in BFSI, retail and manufacturing sectors,” said N Chandrasekaran, managing director.

The firm’s strong performance is giving industry observers and analysts reason to be optimistic, cautiously, about the IT sector following Infosys’ impressive showing too for last quarter of 2016. Digital space accounted for 15.5 per cent TCS’ quarter revenues, according to Chandrasekaran. “Our investments in building high-impact digital platforms are paying off, resulting in over $2.3 billion in digital revenues,” he said. The firm is also set to launch new products in emerging areas leveraging the Internet of Things, automation and machine learning. “TCS and Infosys have both done well. Both companies have been giving special attention to new technology businesses - IoT, automation, machine learning etc and there’s no reason why this growth cannot continue. Companies that don’t adapt will need to worry,” said a senior analyst. Others also point to TCS’ focus on domestic G2C services as a measure of stability for revenue generation.

treats $940mn fine as contingent liability

TCS said the $940 million fine slapped by a US court has been addressed for the moment as a contingent liability on its books with a full disclosure, and that future accounting action would depend on how the case evolves. A contingent liability in accounting norms is a potential financial obligation that may arise in the future due to certain developments.

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