Revenues are up 16% from same period last year
By R. Chandrasekaran
CHENNAI: India’s biggest software exporter and technology bellwether Tata Consultancy Services (TCS) has showed its class once again with a thumping first quarter results that came in ahead of Street predictions. Not only this, the company sees enough opportunities to top the industry exports estimation in the current fiscal year. These were enough for markets to hit a yearly high with over 5 percent gain in the Indian bourses.
Only a week ago, India’s second largest software exporter Infosys delivered better than expected results and retained its outlook compared to market expectations of lowering the fiscal year forecast. The results also came on the back of the quarterly numbers from Oracle and Accenture and their reduced forecast for the remainder of the year.
It may sound that TCS has taken forward from where Infosys has left off, as far as the technology sector is concerned. But the fact is that TCS has been delivering strong results that are time and again either met or topped predictions probably due to its mixture of revenues and the belief that discretional projects demand is still intact. On the other hand, Infosys struggled to not only meet the expectations but are wary of forecasts citing uncertainty in discretionary projects demand.
The major factors that helped the Tata group company to gain in the June or first quarter included volume growth of 6.1 percent from the March quarter beating the Street expectations of 4 to 4.5 percent and the sequential revenue growth of 4.1 percent in dollar terms to $3.165 billion, which is again more than analysts’ expectations of 3.5 percent upside despite a slump of 5 percent slump in business from India.
On a year-over-year basis, revenues jumped 16 percent, which is above the National Association of Software Service Companies (NASSCOM) expectations of 12 – 14 percent annual growth. Operating income grew 14 percent to $856 million and its margin of 26.9 percent came in above predictions.
The first results benefited from the growth in all industry led by Life Sciences, Telecom, Retail and BFSI. There was also a balanced growth in IT and other services led by Assurance, Global Consulting, EiS, and Asset Leveraged Solutions. The major markets upside was led by the United States, thus suggesting improved business climate since the region contributes more than 50 percent of revenues to Indian IT companies.
Obviously, TCS CEO and Managing Director N. Chandrasekaran was happy to say, “We have delivered another solid quarter, driven by the highest volume growth in the past seven quarters. It has been an all-round performance with strong revenue growth across markets led by the US. Our investments in Europe continue to gain strong traction with customers and helped us deliver industry-leading growth this quarter.â€
While infosys provide annual guidance, TCS normally refrains from giving any outlook. However, at the beginning of the fiscal year, the company indicated that it will exceed NASSCOM’s forecast. But this time after first quarterly results, the technology company is more confident to say that its annual results will top the upper end of NASSCOM’s projections.