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TCS Q4 net profit jumps 22% to Rs 3,597 crore

Revenue for the fourth quarter endeed March 31, 2013 grew by 23.9 percent to Rs 16,430.1 crore as against Rs 13,259.3 crore in the year ago period, according to the IFRS reporting.

Mumbai: Country's largest software exporter TCS Wednesday reported a 22.1 percent jump in net profit at Rs 3,596.9 crore for January-March quarter, meeting market expectations, and expressed the confidence of beating Nasscom estimate of 12-14 percent industry growth in 2013-14.

TCS Managing Director and Chief Executive N Chandrasekaran attributed the robust numbers to double-digit growth across verticals. The company had posted Rs 2,945.5 crore net profit in the same quarter a year ago, under the IFRS reporting.

Revenue for the period under review grew 23.9 percent to Rs 16,430.1 crore compared to Rs 13,259.3 crore a year ago.

"We have delivered a year of strong growth with all markets and industry segments growing in double digits. Pricing has been stable...We remain confident that the new fiscal will bring greater opportunities," Chandrasekaran told reporters here this evening.

For the full fiscal (FY13), net profit jumped by 30.9 percent to Rs 13,941.4 crore compared to Rs 10,651.7 crore in the previous fiscal.

Expressing confidence of beating apex industry body's growth estimate for FY14, Chandrasekaran said deal pipeline remains strong for the company.

"Looking ahead, our deal pipeline is strong, we see a strong momentum. Deal closures are happening. We see traction both in 'run the business' as well as discretionary spend ...This fiscal is going to be better than FY13. We will be ahead of Nasscom numbers in constant currency," he said.

The company plans to add 45,000 staff in FY'14.

Full fiscal revenue jumped 28.8 percent to Rs 62,989.5 crore from Rs 48,893.8 crore last year, Chandrasekaran said.

TCS does not offer guidance. Ahead of results, TCS shares fell by 1.73 percent on BSE.

TCS numbers follows rival Infosys dismal earnings and muted guidance that had sent its shares on a tailspin. Infosys shares tanked 22 percent last Friday after it said FY'14 revenue growth would be 6-10 percent, way below industry estimate by Nasscom.

Third-ranked Wipro will announce earnings on Friday.

TCS announced a dividend of Rs 22 per share, including a proposed final dividend of Rs 13.

Gautam Sinha Roy of Motilal Oswal Securities said, "TCS net came in line with our expectations. So is the dollar revenue which just grew 3.1 percent Q-o-Q, while volume grew just 4.4 percent."

Although TCS view for this fiscal is better than FY13 on the back of good deal pipeline and strong performance, Motilal Oswal Securities has a 'neutral' view on the counter, he said.

While Infosys continues to maintain a cautious outlook on the demand environment, TCS presented a bullish outlook.

"By and large, the environment presents a lot of opportunities for us because there is increasing adoption of technology because companies are looking at technology to transform themselves for growth," Chandrasekaran said.

Infosys, which disappointed the market with its 3 percent growth in net profit, gave a muted outlook of 6-10 percent growth in revenue for FY2014 citing challenging global economy.

Smaller rival HCL Technologies earlier today posted a whopping 72.6 percent jump in quarterly profit and 23.2 percent growth in revenues in the January-March quarter.

On business targets, Chandrasekaran further said the company is pursuing more number of large deals, both in terms of number and size.

TCS said its business volume grew 4.4 percent from the previous quarter, while operating margins fell to 26.5 percent from 27.7 percent in the same quarter a year ago.

Revenues from North America grew by 27 percent, while those from England rose by 44 percent and Europe grew by 21 percent, said TCS Chief Financial Officer Rajesh Gopinathan.

Among growth markets, Latin America grew by 40 percent, Asia Pacific 27 percent, India 16 percent and Middle East 28 percent, he added.

The company's infrastructure services grew 47 percent, BPO business 46 percent, while assurance services, enterprise solutions and global consulting grew 33 percent, 25 percent and 52 percent, respectively.

Gopinathan said the company spent Rs 2,600 crore in capex last year and expects it to be in the same range in FY14.

Ajoy Mukherjee, EVP and Head-Global Human Resources, TCS, said the company will give 100 percent variable pay for the quarter.

"The wage hike (cycle) will also start from April onwards. This year will be averaging 7 percent (hike) in the country, so based on their performance, they see a wage hike of 5-10 percent plus."

Employees in developing countries will see wage hike in 4-6 percent range, while for those posted in the developed markets, it will be 2-4 percent, Mukherjee said.

Asked if the company is still looking at acquisition opportunities in Europe, Chandrasekaran said TCS will look at both organic and inorganic routes for growth in the region.

"Europe is a focus area. We have been saying for sometime that we are looking at Germany and France. We are happy that we found the right company and we hope to complete the transaction by June with all the necessary approvals."

TCS last week said it was acquiring French enterprise solutions provider Alti for 75 million euros (about Rs 533 crore) in an all-cash deal.

The revenues should start kicking in from Q2 onwards, the CEO added.

TCS, which added 52 new clients in Q4, is also looking at opportunities in Germany and Japan.

"We have endeavoured to maintain our profitability despite stiff headwinds and increased volatility through the year," Gopinathan said.

As of March 31, 2013, TCS has applied for 1,280 patents, 192 of them in Q4. Till date, the company has been granted 81 patents.


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