US growth drives TCS net up 15.7% in Q1

Led by strong growth in the US market, India's largest software services exporter Tata Consultancy Services on Thursday reported 15.7 per cent rise in net profit in the first quarter of FY '14 to Rs 3,796 crore as compared to Rs 3,280 crore in the same period last year.

The company's revenue stood at Rs 17,987 crore in the quarter under review, an increase of 21 per cent from Rs 14,868 crore it reported in the April to June quarter last year.

Commenting on the Q1 performance, Chief Executive Officer and Managing Director, N Chandrasekaran said, “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,” he added.

On a sequential basis, TCS reported 9.5 per cent increase in revenues and 5.5 per cent in net profit.

During the quarter, TCS closed the acquisition of Alti , one of the top 5 system integrators of SAP solutions in France with several top French corporations in the banking, financial services, luxury, manufacturing and utilities sectors as its key customers.

The company, in a statement said that growth in Q1 was holistic and across all industry segments led by life sciences, retail, telecom and BFSI.

“The current environment demands an agile operating model that can capture diverse growth opportunities. We continue to execute to plan and invest for growth, while maintaining stability in our margin profile,” Chief Financial Officer Rajesh Gopinathan said.

As of June 30, 2013, the company has applied for 1340 patents including 60 applied during the quarter and till date, the company has been granted 90 patents.

The gross addition at TCS stood at 10,611 people (net addition of 1,390) taking the total employee strength to 2,77,586 on a consolidated basis.

The utilization rate (excluding trainees) was at 82.7 per cent and that including trainees was 72.5 per cent.

The attrition rate (LTM) dropped further sequentially to 10.52 per cent including BPO. The attrition rate in IT was at 9.55 per cent, while BPO attrition was higher at 15.77 per cent.

“The growth was driven by a solid sequential volume growth of 6 per cent. We continue to believe that industry leading growth and superior execution would continue to support TCS’s premium valuations (20x FY ‘14) vs the sector,” Religare Institutional Research IT and Telecom Analyst Rumit Dugar said.