TCS reports Q1 net profit of Rs6318 cr; dollar revenue rises 3.7%

Tata Consultancy Services (TCS), India's largest software services exporter, has reported net profit of Rs6,318 crore ($940 million) for the April-June 2016-17 quarter.

While profit figures were better than most analysts expected, it was down 0.36 per cent compared to the previous quarter (January-March 2015-16), but was supported by better operational numbers.

Revenue for the quarter increased by 3 per cent to Rs29,305 crore while revenue in dollar terms stood at $4,362 million, up 3.7 per cent at current exchange rates and up 3.1 per cent in constant currency terms.

"Strong execution and accelerating customer adoption of cloud, big data and analytics has driven broad-based growth across markets and industries," N Chandrasekaran, CEO and MD said.

Volume growth during the quarter improved to 3.4 per cent against 3.2 per cent in preceding quarter. Digital revenue stood at 15.9 per cent in Q1 driven by demand for business agility, TCS said, adding so far more than 1.65 lakh employees were trained with significant expertise in new digital technologies.

Profit gains were partly supported by other income that grew 6.5 per cent to Rs975 crore compared with preceding quarter. TCS said during the quarter, it posted incremental revenue of $155 million - the highest in last seven quarters up to Q1 - driven by strong growth across core markets in North America, the UK and Europe.

Earnings before interest and tax (EBIT) fell 0.87 per cent to Rs7,347 crore and margin contracted by 95 basis points to 25.1 per cent compared to preceding quarter.

''Our rising employee retention rates for three consecutive quarters reflects our focus on engagement and investments we have made to build strong digital talent base. This is paying off with over 165,000 TCSers now trained with significant expertise in new Digital technologies that are rooted in specific domains,'' Chandrasekaran added.

''This has been a quarter of good financial performance balancing revenue growth, profitability and cash generation. Our disciplined approach to operations have helped us counter strong headwinds in the form of annual salary hikes and promotions as well as global currency and market volatility through the quarter. We continue to invest in people, platforms and products as we look to strengthen our competitive position across key markets,'' Rajesh Gopinathan, chief financial officer, said. 

''Adoption of Cloud, Big Data and Analytics is driving demand in manufacturing, energy and utilities and communications while front-office transformations are helping growth in telecom and media sectors. Consumer businesses like retail, TTH and life sciences are also increasingly using analytics to create rich experiences for each customer and reimagine each unique customer's journey,'' TCS stated in a release.

As of 30 June 2016, the company has applied for 2,928 patents, including 67 applied during the quarter. Till date the company has been granted 385 patents, TCS said.

Total employee strength of TCS at the end of Q1 was 362,079 on consolidated basis with gross addition of 17,792 (net addition: 8,236 employees). The total attrition rate (LTM) fell to 13.6 per cent including BPS. The percentage of women in TCS rose to an all-time high of 33.8 per cent while the number of nationalities increased to 131.

''We are delighted that for the third quarter in a row, our attrition rates have fallen underscoring our ability to engage with employees and provide long-term careers. We remain focused on building a team of global professionals with diversity and multiple skill-sets and helping TCSers secure additional skills in new technologies. The process of on-boarding this year's campus trainees has also begun.'' said Ajoy Mukherjee, executive vice president and global head, human resources.