TCS reports decent Q3 numbers, positive outlook
Chandrakant / 18 Jan 2012
TCS has come out with a good set of financial numbers for Q3 FY12. The company's topline jumped by 13.5% to Rs 13204 cr on a QoQ basis, while the bottomline grew by 22% to Rs 2886 cr.
After Infosys and HCL Tech, Tata Consultancy Services (TCS) has come out with a good set of financial numbers for the Dec 2011 quarter. The company's topline jumped by 13.5% to Rs 13204 cr on a QoQ basis, while the bottomline grew by 22% to Rs 2886 cr. The net profit margins improved by 140 bps QoQ to 21.2%.
A weaker rupee against the dollar helped the company to report better margins during the quarter. As regards the outlook, however, there seem to be conflicting signals from the major IT companies. On one hand, where Infosys sounded more cautious for the coming quarter, on the other hand, HCL and TCS are expecting decent growth despite challenges on the global front.
Moreover, TCS added 40 new clients against 35 in the previous quarter. With a net addition of 11981 employees, the total employee strength stood at 226751 by Dec 31, 2011.
|
Consolidated Financial Numbers (Rs/Cr) | |||||
|
Particulars |
Q3 FY12 |
Q2 FY12 |
QoQ |
Q3 FY11 |
YoY |
|
Net Sales |
13204 |
11633 |
13.5 |
9663 |
36.6 |
|
Other Income |
-87 |
122 |
-171.3 |
194 |
-144.8 |
|
EBITDA |
4094 |
3384 |
21.0 |
2900 |
41.2 |
|
Interest |
5 |
9 |
-44.4 |
5 |
0.0 |
|
PAT |
2803 |
2301 |
21.8 |
2370 |
18.3 |
|
EPS |
14.75 |
12.46 |
18.4 |
11.99 |
23.0 |
|
EBITDA Margin |
31.01 |
29.09 |
6.6 |
30.01 |
3.3 |
|
PAT Margin |
21.2 |
19.8 |
7.3 |
24.5 |
-13.4 |
The positive set of numbers has come on the back of good growth in the entire business segment as well as geographically. All the sectors posted double digit growth on a QoQ basis, except Telecom, which grew by 6.9%.
|
Business Verticals |
Revenue % Share |
QoQ Growth | |
|
Q3 FY12 |
Q2 FY12 | ||
|
BFSI |
43.3 |
43.5 |
12.5 |
|
Telecom |
10 |
10.7 |
6.9 |
|
Retail & Distribution |
12.3 |
12.1 |
15.1 |
|
Manufacturing |
7.8 |
7.8 |
14.2 |
|
Hi-Tech |
5.9 |
5.9 |
13.5 |
|
Life Sciences & Healthcare |
5.3 |
5.3 |
14.8 |
|
Travel & Hospitality |
3.8 |
3.8 |
13.9 |
|
Energy & Utility |
4.1 |
4.3 |
10.5 |
|
Media & Entertainment |
2.2 |
2.1 |
19.8 |
|
Other |
5.3 |
4.5 |
31.5 |
|
Total |
100 |
100 |
13.5 |
Europe led the growth story with 18.1% growth QoQ, followed by the US (13.3%) and UK (9.5%). In the emerging markets, Latin America showed significant momentum with 18.6% growth QoQ, followed by India (14.8%) and Asia-Pacific (15.7%). However, the company's volumes increased by 3.2%, which is lower than those of HCL Tech, which grew by 5.7%.
In a statement that it released, the company stated that the service line, which contributes to around 80% of the overall revenues, has witnessed more than 30% growth YoY. It added 2 new clients worth US$ 100 million during the quarter, which gives hope of a silver lining and the promise of some respite amidst growing uncertainties in the global economy. On the same front, Infosys bagged 2 major deals, but remained cautious on its outlook.
TCS Chief Executive Officer, N. Chandrasekaran, in a statement to the media, said, "On the ground, from our point of view, things seem to be going well. We continue to close deals, we continue to ramp up, things are looking okay... All the macro concerns remain for Europe but based on the data points we have, we don't see any reason why growth will slow down from current levels." On the outlook for Q4, the company said that it expects pricing for its services to remain stable, despite the debt crisis in Europe, which is its second biggest market after the US.
Infosys, on the other hand, sounded more cautious and said the outlook in the coming quarter looks grim due to the European crisis, which may also impact business in the US market. Considering the macro issues, the company has lowered its revenue guidance for the coming quarter and for FY12 as a whole.
We, at DSIJ, believe that TCS has reported good Q3 numbers, which indicates that the health of the global outsourcing business is strong. However, a further deepening of the European crisis may impact the business in the coming quarter.
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