For India’s largest IT services firm Tata Consultancy Services (TCS), the fourth-quarter and annual results for financial year 2012 were about setting milestones. TCS became the first IT services company in the country to cross the $10-billion mark (according to IFRS) in revenues for the year ended March 31. By reporting a 22.6 per cent increase in its net profit on a year-on-year basis for the fourth quarter ended March, TCS gave an upbeat outlook and reiterated it was better placed to manage growth compared to its peers, especially Infosys.The better than expected numbers also put to rest some of the concerns over the demand environment for IT services.
“We have good momentum. We have a good pipeline and the traction in business is positive. We do see a good year ahead and we are sure growth for the next fiscal will be even across quarters,” said CEO & MD N Chandrasekaran. Though the company does not give any guidance, Chandrasekaran said it would do better than the Nasscom prediction of growth for the industry at 11-14 per cent.
TCS saw its revenues rise to Rs 13,259.30 crore in the quarter under review with y-o-y growth of 30.5 per cent, backed by ramping up of existing clients and steady growth of its business across major geographies.
The company’s growth during the quarter was also driven by a volume growth of 3.3 per cent. In US dollar terms, the company's revenue for the full year was $10.17 billion.
In the results announced so far by tier-1 IT services firms, TCS sounded far more bullish than Infosys and HCL Technologies on the demand environment. While both Infosys and HCL indicated discretionary spends were going to be an area of concern and already there were some project ramp-downs, the TCS management said discretionary spends had been easing since Feburary.
On a sequential quarterly basis, the company’s net profit went up marginally by 1.6 per cent and revenues grew 0.4 per cent.
"The TCS results were in line with estimates on the revenue and profit fronts. The 3.3 per cent volume growth was encouraging in a tough macro environment,” said Dipen Shah, head of fundamental research, Kotak Securities.
Margins for the quarter decreased 155 basis points (bps) to 27.7 per cent. This was largely due to the negative 71-bp impact of forex loss (Rs 125 crore) and an 11-bp fall due to offshore moves. During the quarter, the company's productivity was up 47 bps.
