The Tata Group firm has reported profit at Rs 6,904 crore for the quarter ended March 2018, registering a 5.7 percent growth compared to Rs 6,531 crore in previous quarter.
Country's largest IT services provider Tata Consultancy Services' March quarter earnings, on Thursday, beat analyst expectations on all front barring operating profit margin that was in line.
"Strong demand in digital across all industry verticals and large transformational deal wins have made this one of best fourth quarters in recent years. The strong exit allows us to start the new fiscal on a confident note," Rajesh Gopinathan, CEO and MD said.
TCS shares gained a percent to close at Rs 3,190.65 on the Bombay Stock Exchange ahead of results that announced after market hours.
Here are 10 key takeaways from company's January-March quarter earnings: Stock Free Tips
profit
The Tata Group firm has reported consolidated profit at Rs 6,904 crore for the quarter ended March 2018, registering a 5.7 percent growth compared to Rs 6,531 crore in previous quarter and 4.5 percent growth over year-ago period.
Strong revenue growth and higher other income (up 13.7 percent QoQ) boosted profitability.
The Reuters poll of analysts had estimated profit at Rs 6,811.8 crore for the quarter.
Revenue
Consolidated revenue from operations for the quarter grew by 3.8 percent (up 8.2 percent YoY) to Rs 32,075 crore on sequential basis, which was ahead of Reuters poll of Rs 31,669.2 crore.
Revenue for the quarter ended December 2017 was Rs 30,904 crore.
Revenue in dollar terms increased 3.9 percent, the highest growth in last 14 quarters, to USD 4,972 million in Q4FY18, which was far ahead of analyst estimates. Dollar revenue growth on year-on-year basis was in double digit at 11.68 percent.
"Dollar revenue growth was above our 2.4 percent QoQ growth and USD 4,901.9 million estimate. The dollar revenue growth was supported by strong cross currency tailwind (1.9 percent in our view)," ICICIdirect.com Research said.
Revenue growth in constant currency terms was 2 percent (against consensus estimates of over a percent) while volume growth was 2 percent QoQ.
Digital Business
TCS said greater adoption of digital technologies by customers resulted in several large, multipractice integrated deal wins.
Digital engagements contributed 23.8 percent of revenue in Q4 (against 22.1 percent in Q3FY18, a growth of 42.8 percent YoY.
Digital revenue growth was 10.2 percent in constant currency terms QoQ.
Operational Performance
Earnings before interest and Tax (EBIT) increased 4.7 percent sequentially (up 6.8 percent YoY) to Rs 8,147 crore during the quarter, up from Rs 7,781 crore in previous quarter.
Margin for the quarter improved by 20 basis points to 25.4 percent, against 25.2 percent in December quarter, but declined 30 basis points YoY. It was impacted due to higher employee expenses and selling, general and administration cost.
"Disciplined execution delivered an all-time high cash conversion in Q4. With revenue growth improving, and our digital business scaling up, we expect margins to remain in a stable range," V Ramakrlstman, Chief Financial Officer said.
Industry Verticals and Geography Wise Performance
All industry verticals - with the exception of BFSI- grew above company average, with three verticals growing in double digits YoY. Growth was led by the energy & utilities vertical (+33.7 percent), travel & hospitality (+25.4 percent) and life sciences & healthcare (+12.6 percent).
On a YoY basis, the business from Continental Europe grew by 19.1 percent, UK 10.7 percent and Asia Pacific 8.6 percent which all led the growth. North America revenue grew 4.9 percent YoY.
Deal Wins
TCS has seen healthy deal wins during the financial year 2017-18, adding 3 clients in USD 100M+ band, 13 clients in USD 50M+ band, 17 clients in USD 20M+ band and 40 in USD 10M+ band.
Bonus and Dividend
The software services exporter said the board of directors recommended bonus issue of equity shares in the ratio of one share of Re 1 each for every one share of Re 1 each held by shareholders as on the record date, subject to the approval of the shareholders.
The board of directors of the company also approved dividend at Rs 29 per share. "Final dividend will be paid on the fifth day from the conclusion of the Annual General Meeting subject to approval of the shareholders of the company." Total dividend for the year including final dividend stood at Rs 50 per share.
TCS said over around Rs 26,800 crore of cash returned to shareholders in dividends and buyback.
Human Resources
Total employee strength at the end of March quarter stood at 3,94,998 on a consolidated basis. "At an overall level, the focus on training resulted in over 5.6 million learning days in FY18, over 247,000 employees getting trained on digital technologies, and 2,08,000 employees trained on Agile methodologies."
The IT services attrition rate (last twelve months) fell by 0.1 percent in Q4 to 11 percent, while the total attrition rate (including BPS) fell to 11.8 percent.
FY18 Performance
Revenue from operations for the financial year 2017-18 stood at Rs 1.23 lakh crore, an increase of 4.35 percent compared to Rs 1.18 lakh crore reported in previous fiscal while dollar revenue growth was 8.6 percent QoQ at USD 19,089 million.
Profit during the year declined 1.8 percent to Rs 25,826 crore while operating profit increased 0.6 percent to Rs 30,502 crore but margin contracted by 93 basis points to 24.77 percent for the year compared to previous year.
The volume growth for the year was at 7.6 percent & revenue growth in constant currency was 6.7 percent.
Patents
As of March 31, 2018, the company has applied for 3,916 patents, including 299 applied during the quarter. Till date the company has been granted 654 patents, it said.
