TCS Q1 net profit down 3.3% at Rs 5,709 cr

IT major Tata Consultancy Services reported a 3.3% sequential decline in profit after tax at Rs 5,709 crore in the April-June quarter and on annual basis it declined 13%.

It may be recalled that in the previous quarter ending March 2015, the company announced a cumulative bonus payout of Rs 2,628 crore to employees. If the payout is not factored in, profit for the quarter stands at Rs 5,906 crore.

The company announced an interim dividend of Rs 5.50 per share. The attrition rate during the quarter has been 15.9%, one of the highest for the company in the recent past. The big positive however was volume growth of 4.8%.

The revenue rose 6% to Rs 25,700 crore as against Rs 24,220 crore in March 2015 and on annual basis there was 16% growth.

The company added ten clients in over $20 million bracket & one over $100 million bracket. Growth among industry segments led by retail, life sciences, BFSI.

The dollar revenue was at $4,036 million as against $3,900 million in the previous quarter, a growth of 3.5%.

Speaking about the results, TCS CEO N Chandrasekaran said: "Demand from core markets like North America and greater traction for ‘Digital’ solutions has driven volumes & growth in the first quarter. Our significant investments in IP and platforms, digital capabilities and our execution track record gives us a firm foundation to capture growth in the current financial year.”

He further said, "We are investing to train over 100,000 professionals this year in all relevant technologies."

Rajesh Gopinathan, Chief Financial Officer, said: “Our disciplined approach to all aspect of operations have helped maintain operating margins within our stated range despite hedging volatility and the impact of our annual cycle of salary hikes and promotions. We continue to focus on optimizing our cash conversion ratios and investing in people and technologies ahead of our business needs.”

During Q1, TCS posted the incremental revenues of $136 million driven by strong growth across core markets led by North America, UK, Europe, MEA and Asia-Pacific. Growth among industry segments was led by Retail, Life Sciences, BFSI and Telecom. Asset-Leveraged solutions led the growth among service lines followed by Infrastructure, Assurance and BPS.

“Our focus remains on making TCSers proficient in new technologies, giving them the tools to be more productive and building an engaged and diverse team of global professionals. This continues to yield results with our utilization rates being maintained at well over 85 per cent. The process of on-boarding this year’s campus trainees has also begun.” said Ajoy Mukherjee, executive vice president and Global Head, Human Resources.

The total employee strength at the end of Q1 was 324,935 on a consolidated basis with gross addition of 20,302 associates (net addition: 5,279 employees). The utilisation rate (excluding trainees) was at an high of 86.3% and that including trainees was 82.9%. The percentage of women in TCS rose to an all-time high of 33.5% while the number of nationalities increased to 124.