Mumbai: TCS, country's largest software exporter, Thursday posted a 45 percent jump in June quarter net profit at Rs 5,568 crore helped by a broadbased revenue growth and one-time impact from a change in depreciation computation.
The city-headquartered company had posted a net profit of Rs 3,840 crore under the IGAAP system of accounting for the corresponding period last year.
"It has been a very well rounded, broadbased growth across the board," TCS Chief Executive and Managing Director N Chandrasekaran told reporters after announcing results.
On the outlook front, he said the scenario is panning out as per its expectation and added that he maintains the performance in FY'15 will be better than FY2013-14.
He said markets like US, UK, Europe and India helped Tata Consultancy Services (TCS) achieve a 22.9 percent jump in revenue on to Rs 22,111 crore during the reporting quarter.
The Tata group company faced headwinds in the Middle East and Africa market, while among the segments, all execpt insurance, where it faced some trouble, performed well, he said.
Chandrasekaran said that while the dip in business from the insurance vertical is nothing to worry about, the company does not expect it the deliver high growth.
The inclusion of India among the high growth markets was a surprise and Chandrasekaran tempered expectations, saying he does not expect domestic revenues to rise so well.
In the backdrop of the slew of IT-driven announcements by the new government, Chandrasekaran said TCS expects some opportunities to arise in the space but will wait for them to show up before changing its stance.
"From a India point of view, we are still cautious. I wouldn't say that we will start to see high growth," he said.
A change in depreciation methodology had a positive impact of Rs 490 crore for the bottomline under IGAAP, its chief financial officer Rajesh Gopinathan said. However, the same under IFRS had a negative impact as the computation methodology differs.
The company scrip slipped by 0.84 percent to Rs 2,381.10 a piece on the BSE today.
On operating margin front, the total margin of the company came in at 26.3 percent for the reporting period under IFRS, which was down 2.85 percent as against the preceding March quarter.
This was due to a 0.73 percent impact of rupee appreciation, 0.79 percent due to the change in depreciation methodology and 2.19 percent because of a 10 percent wage hike effected from the reporting quarter onwards, he said. Improvement in operational efficiencies resulted in a positive impact of 0.86 percent on the operating margin.
"Our comfort range on the margins is between 26 to 28 percent and it may vary every quarter according to the operating environment," Chandrasekaran said, adding that the company prefers to invest the excess margins in its strategic initiatives.
He conceded that the currency movement will be a "headwind" during the fiscal, but added that the company is fine till there isn't excessive volatility in the rupee.
During the quarter, the company won seven large deals of over USD 50 million spread across retail, life sciences and banking sectors, he said, adding that it is at present in talks for eight other similar large value deals.
Contrary to its rival Infosys indicating that there are some pressures on the deal pricing front, TCS said the pricing environment is stable, Gopinathan said.
During the reporting quarter, it hired over 15,000 people, while the net hires stood atr 4,967. The attrition rate went up to 12 percent, but Chandrasekaran said it is always higher during the first quarter owing to resignations to pursue higher studies.
Its utilisation level shot up to an all time high of 85.3 percent excluding the trainees, but TCS does not target a particular level on the utilisation front.
Its head of human resources Ajoyendra Mukherjee said 3,000 of the 25,000 offers to freshers made by the company have already joined, will the rest will be joining over the course of the year. He added that the company is maintaining its gross hiring target of 55,000 for the fiscal.
Brokerage firm Angel Broking said the results were better than its expectations and maintained its buy call on the stock.
