TCS

The company had forewarned – its Q3 performance could be hit by cross currency winds. And this is precisely what happened. The company’s revenue performance though scaled down by many, yet fell short of analyst expectations. TCS’s revenue (dollar) showed a meagre 0.5% growth (QoQ)nat $3.93 billion but in terms of rupee, revenue rose just 3% at Rs.24,501 crore and this was mainly on account of rupee depreciation. In terms of profitability, net profit (dollar) was flat, up by just 0.1% at $873 million and in rupee terms, rose 3% at Rs.5444 crore. Its volume growth too was much below expectations at 0.4%, which is a huge let down from Infosys’s volume growth of 4.2% reported for current Q3. The only redeeming part – EBITDA margins rose 20 bps to 27% and this was the only thing which came in line with estimations. This expansion in margins was led by higher realizations. Other income rose 74% at Rs.1503 crore and this includes forex gain of Rs.241 crore, which helped boost the rupee bottomline growth.

In terms of its verticals, BFSI grew 3.1% (QoQ), Retail and Distribution was up 1.7%, Life Sciences rose 5%, Manufacturing rose 2.6% and Hi-Tech was up 5%. The pressure came from its Insurance vertical, especially Diligenta which is showing growth pressures, with poor visibility for the future. In terms of Geographies, revenue from UK fell 3.2%, Asia-Pacific fell 0.7% but other regions did better – North America grew 4.7%, Latin America by 10.3%, Europe grew 4.1% and India revenue rose 4%.

The company’s utilization rate (excluding trainees) came in at an all-time high at 86.7% and attrition was at 13.4% though much lower than Infosys 20.4%. The company expects to see growth through small deals and in current Q3, it added one $100 million client, three $50 million client and 20 $5 million clients.