TCS Q1 FY19 profit rises 24 pct, beats estimates

Tata Consultancy Services (TCS), country's largest software services firm, reported its June quarter earnings for financial year 2018-19 today, kicking off the Q1FY19 results season. India's biggest software services exporter posted a better-than-expected rise of about 24 percent in first-quarter net profit, helped by strong growth in its banking, financial services and insurance division.

The Mumbai-headquartered company posted a net profit of 73.40 billion rupees ($1.07 billion) in the quarter ended June 30, compared with 59.45 billion rupees a year earlier, the company said in a statement on Tuesday. 

Analysts, on average, had expected a consolidated net profit of 69.83 billion rupees, according to Thomson Reuters data.

The key highlighs are:

Q1 FY19 Net Profit at Rs 7,340 crore; up 6.3% Q-o-Q
Q1 FY19 Revenue at Rs 34,261 crore; up 15.8% Y-o-Y and 6.8% Q-o-Q
Q1 FY19 Revenue; In Constant Currency terms; up 9.3% Y-o-Y and 4.1% Q-o-Q
Q1 FY19 Revenue at $ 5,051 million; up 10 % Y-o-Y and; 1.6% Q-o-Q

Financial Highlights for Quarter Ended June 30, 2018

Revenue at Rs 34,261 crore; +15.8 % Y-o-Y and 6.8% Q-o-Q
Net Income at Rs 7,340 crore; +23.5% Y-o-Y and +6.3% Q-o-Q
Operating Margin at 25%
Net cash from operations at 103.7% of Net Profit
Earnings Per Share at Rs 19.17 up 26.1% YoY; Dividend per share of Rs4.00
Proposed record date 18/07/18; Payment date 25/07/18

Business Highlights for Quarter Ended June 30, 2018

BFSI vertical growth accelerates: +4.1% YoY; +3.7% QoQ
North America rebounds on BFSI and Retail recovery: +7% YoY; +3.7% QoQ
Digital revenue at 25%, up 44.8% Y-o-Y
2 new clients in $100M+ band, 13 clients added in $5M+ band sequentially
World’s largest Agile-ready workforce: 242,000+ employees Agile trained
Total employees: 400,875; IT Services attrition rate at 10.9% LTM 

What Rajesh Gopinathan, CEO & MD of TCS said: 

Commenting on the Q1 performance, CEO and MD, Rajesh Gopinathan said: “We are starting the new fiscal year on a strong note, with the growth engine firing on all cylinders. Our Banking vertical recovered very nicely this quarter, while other industry verticals maintained their momentum. With a good set of wins during the quarter, a robust deal pipeline and accelerating digital demand, we are positioned well for the future.”

Gopinathan added: “Customers across verticals and markets are embracing our Business 4.0 thought leadership framework and accelerating their digital transformation journeys. Our contextual knowledge, full
spectrum capabilities and investments in research and innovation are making us their preferred partner for their growth and transformation initiatives.”

"In North America we have broken into the top 60 brands bracket"

"Our focus on machine first delivery model leverages automation in a very operational and value add perspective especially in IgNIO" 

"Digital now accounts for 25 % revenue" 

IT attrition rate at 10.9%"

"We have got two new clients in the 100mn+ band, 13 clients added in the 5mn+ band" 

"We are very focused on getting back well above the double digit growth" 

“It is a very encouraging quarter for us”

“UK we are seeing 18% growth driven by large deals signed, Europe also has seen significant growth”

"Energy and resources 30% Y-o-Y" 

"In UK , we are seeing 18 percent growth" 

"We have got two new clients in the 100mn+ band, 13 clients added in the 5mn+ band" 

"Digital now accounts for 25 % revenue" 

"We are very focused on getting back well above the double digit growth"

"On BFSI, we are quite enthused by the demands we see. Medium term outlook continues to be positive" 

“BFSI demand is coming across the board, whether it is reimagining customer experience or customer front end, including wealth management”

Use of automation to drive efficiency and easier regulatory compliance, we are seeing banks expand regionally and horizontally"

“Brick and Mortar Retail is embracing online as opposed to pure online play by increasing the richness of their offerings”

"We have the world’s largest agile ready workforce: 242,000+employees are agile trained"

"Use of automation to drive efficiency and easier regulatory compliance, we are seeing banks expand regionally and horizontally" 

"Our strategy of organic talent development resulted in a cumulative 11mn learning hours with over 246k employees trained in digital technologies" 

“This is the year we are celebrating 50 years and I thank everyone to be a part of the celebrations”

What N Ganapathy Subramaniam, COO and Executive Director of TCS said: 

"The pipeline of large deals is solid and we continue to focus on digital offerings" - 

“Lot of our digital offerings are gaining traction whether it is TCS interactive, block chain, IoT; we have won significant deals” 

“We are always open for acquisitions in products or offerings and we will keep evaluating it”

“It has been an excellent quarter, with broad-based growth across all segments and good client additions. We are seeing strong demand in areas like cloud transformation, cyber-security and data privacy, and automation. Our investments in forward-thinking doctrines like the Machine First Delivery Model (MFDM) and Location-independent Agile are giving customers immediate, measurable business benefits and speed to market.

What V. Ramakrishnan, CFO of TCS said: 

“Growth has definitely picked up in this quarter”  

"Disciplined execution, accelerating growth and currency support helped us mitigate the impact of wage increases during the quarter. This strong start gives us greater confidence in our ability to get our operating margin to our preferred range, while continuing to fund the digital investments that are differentiating us in the marketplace.”