TCS posts 0.2% rise in Q3 profit at Rs 8,118 cr; announces dividend of Rs 5

Rajesh Gopinathan, CEO of Tata Consultancy Services. Photo: Kamlesh Pednekar
Tata Consultancy Services (TCS) on Friday reported a 0.2 per cent year-on-year (YoY) rise in its consolidated net profit at Rs 8,118 crore for the third quarter of the current fiscal. (Q3FY20). Sequentially, the numbers grew 0.94 per cent. 

Revenue for the quarter came in at Rs 39,854 crore, up 6.7 per cent YoY while in constant currency terms, revenue grew 6.8 per cent YoY. Sequentially, revenue in constant currency terms grew 0.3 per cent. 

The company also announced interim dividend of Rs 5, record date of which has been fixed on January 25 while the payment date is January 31. 

Total income during the quarter under review stood at Rs 40,672 crore, up 5.63 per cent YoY. Basic and diluted earnings per share (EPS) of the company stood at Rs 21.63, up 0.13 per cent YoY. The company's operating margin stood at 25 per cent. Net cash from operations stood at nearly Rs 9,451 crore which was 116.4 per cent of net income. 

The numbers were slight below Street expectations. For instance, analysts at Emkay Global Financial Services had estimated TCS' net profit or profit after tax (PAT) to grow 1.8 per cent QoQ and 1 per cent YoY to Rs 8,187.1 crore. Net sales (revenue) was seen at Rs 40,110 crore, up 7.4 per cent YoY and 2.9 per cent QoQ. Ebitda margin was expected to rise 27 bps QoQ to 27.3 per cent. On a YoY basis, the margin was expected to see a jump of 104 bps. They had built in a 1.2 per cent revenue growth QoQ in CC terms, with nearly 90-bp QoQ cross-currency tailwinds.

"We saw the sectoral trends of the first half of the year continue to play out in the third quarter. Our robust order book during the quarter reflects our ability to pitch innovative technology solutions to address the business needs of different stakeholders in the enterprise, and participate in our customers' enterprise-wide transformation initiatives. This is also helping deepen and broaden our customer relationships, and make the business more resilient," said Rajesh Gopinathan, Chief Executive Officer (CEO) and Managing Director (MD). 

Industry-wise, revenues from Banking, Financial Services and Insurance (BFSI) segment stood at Rs 15,483 crore, up 5.16 per cent YoY while Manufacturing grew 5.3 per cent. Revenues from Retail and Consumer Business stood at Rs 6,709 crore, up 4 per cent. Communications segment revenue stood at Rs 6,608 crore, up 8.5 per cent YoY.

Life Sciences & Healthcare continued to outperform as the segment grew 17 per cent YoY. 

Addressing the media post results announcement, TCS CEO Rajesh Gopinathan said that BFSI is a complex area and UK and US continue to remain challenging for the vertical.

"In a seasonally weak quarter characterized by furloughs across multiple industry verticals, we focused on execution, while  continuing to invest for future growth. Having onboarded over 30,000 trainees in the first half of the year, we worked on driving up utilization in Q3 and had good outcomes. Our client metrics were also very good, with additions across most revenue buckets," said N Ganapathy Subramaniam, Chief Operating Officer & Executive Director. 

During the quarter, the company won deal worth $6 billion, taking 9MFY20 to total contract value (TCV) of US$18 billion, up 22 per cent YoY.

Geographically,  growth was led by Europe (+15.9%) and Middle East and Africa (MEA) (+10.8%) and UK (+7.5%). North America and Asia Pacific grew 4.1 per cent and 5.7 per cent, respectively. India grew 6.4 per cent while Latin America grew over 6.2 per cent. 

On year-to-date (YTD) basis, TCS saw net addition of 22,390 employees. IT Services attrition rate stood at 12.2 per cent last twelve months (LTM). The company said that 93 per cent of the 30,000 freshers onboarded in first half of the fiscal has been deployed in projects.

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel