TCS Q4 results 2018: This is reason why tech firm's profit soared

Tata Consultancy Services (TCS), the country’s biggest software services exporter, posted a higher-than-expected profit in the fourth quarter, helped by the number of contracts the company won. Net profit attributable to shareholders rose 4.4% to Rs 6,904 crore ($1.05 billion) in the quarter, beating analysts’ average estimate of Rs 6,798 crore, according to Thomson Reuters data.

The company had reported a net profit of Rs 6,608 crore in the same period last fiscal, TCS said in a regulatory filing. Moreover, the company’s board recommended a 1:1 bonus share issue. The Tata Group company, which accounts for a lions share of the group’s overall profit, reported a revenue growth of 8.2% at Rs 32,075 crore for the said quarter, up from Rs 29,642 crore a year earlier.

Strong demand in digital and large contract wins helped growth in the quarter, chief executive Rajesh Gopinathan said in a statement.

“Strong demand in digital across all industry verticals and large transformational deal wins have made this one of our best fourth quarters in recent years. The strong exit allows us to start the new fiscal on a confident note,” Gopinathan said.

Revenue from digital services such as cloud, analytics, big data grew about 43% year-on-year. It accounted for 23.8% of the total revenue. TCS said on Thursday, revenue from its banking, financial services and insurance business, the company’s biggest revenue stream, rose 5% to Rs 12,430 crore ($1.89 billion).

Strong deal wins and a good pipeline positions TCS very well in the new fiscal, TCS chief operating officer and executive director N Ganapathy Subramaniam said.

For the entire 2017-18, TCS saw its net profit dipping 1.7% to Rs 25,826 crore, while revenue rose 4.3% to Rs 1.23 lakh crore.

At the end of March 2018, TCS had 3,94,998 employees with attrition rate at 11% in IT services.

TCS’s strong results echoed those of smaller rival Infosys Ltd, which kicked off the earnings season last week with a higher profit and a healthy revenue forecast for the year even as its margin forecast failed to impress.