Mumbai: If the Infosys results announced last week was a disappointment to a section of the market only because the company could not beat market expectations as it usually does, the results from TCS should make the market more than happy.
The company has delivered very strong results for the third quarter, which has exceeded market expectations, despite the rupee appreciation.
TCS, the largest software developer in Asia, has also become the first Indian IT services company to clock revenues in excess of $1 billion during a quarter. The company concluded a few large deals during the quarter and pricing also improved, even for existing clients.
For the quarter ended 31 December, 2006, consolidated net profit has jumped 44.9 per cent to Rs 1,116.1 crore, or Rs 11.41 per share, as compared to Rs 770.28 crore, or Rs 7.87 per share. Sequentially, net profit has gone up 9.56 per cent from Rs 1,018.68 crore, or Rs 10.41 per share, for the previous quarter.
Consolidated revenues for the quarter increased 40.72 per cent to Rs 4,873.44 crore from Rs 3,463.1 crore for the previous year quarter. Revenues were higher by 8.42 per cent sequentially from Rs 4,493.84 crore for the previous quarter.
Both top line and bottom line growth rates in dollar terms are better, indicated strong business momentum and improved pricing.
Operating profits for the quarter went up 38.84 per cent to Rs 1,388.09 crore during the quarter as compared to Rs 999.77 crore for the previous year quarter. Sequentially, operating profits were higher by 10.87 per cent from Rs1,252.01 crore for the previous quarter. Operating margins as a percentage of revenues increased to 28.87 per cent from 28.48 per cent a year ago and 27.85 per cent for the previous quarter.
Employee costs jumped 49.68 per cent year-on-year and 7.71 per cent sequentially. Increase in overseas business expenditure was lower at 26.33 per cent year-on-year and 2.61 per cent sequentially. Other expenses went up 42.4 per cent from a year ago and 9.79 per cent from the previous quarter.
Interest and depreciation charges increased 48.06 per cent as compared to the previous year quarter and 9.02 per cent sequentially. Other income for the quarter was at Rs38.18 crore as compared to a profit of Rs18.82 crore for the pervious quarter and a loss of Rs14.3 crore a year ago. TCS has reported an exchange gain, included in other income, of Rs3.61 crore for the quarter as compared to a loss of Rs32.36 crore for the previous year quarter.
During the quarter, TCS won a major $140 million 5-year outsourcing deal from a leading bank in Latin America. Another deal worth $100 million came in from a Chinese bank for implementing core banking solutions. Australian airline Qantas placed a multi-year application development and support order worth $90 million. The company also won a $70 million outsourcing and infrastructure management deal from a leading UK-based retailer.
Offshore revenues improved to 41.6 per cent during the quarter as compared to 41 per cent for the previous market and 38.6 per cent a year ago. Share of fixed price contracts in total revenues declined to 41 per cent from 50.6 per cent a year ago.
Share of banking, financial services and insurance (BFSI) went up to 43.5 per cent from 42.7 per cent for the previous quarter and 41.8 per cent for the previous year quarter. Share of manufacturing domain declined to 15.2 per cent while telecom contributed 16.8 per cent.
Decline in North American revenues to 51.9 per cent from 57.4 per cent a year ago and 53.5 per cent for the previous quarter helped lessen the impact of Rupee appreciation against the dollar.
Revenues from UK were 20.1 per cent of total revenues while the rest of Europe contributed 8.5 per cent. Domestic revenues declined to 7.9 per cent from 8.4 per cent during the previous quarter and 11.9 per cent a year ago.
Application development and maintenance remained the mainstay of the company''s business, contributing 53.5 per cent of total revenues. Enterprise solutions contributed 11.8 per cent while business intelligence services pitched in with 9.5 per cent
Client concentration was more or less unchanged with the contribution of top-10 clients at 27.5 per cent as compared to 27.6 per cent a year ago and 26.8 per cent for the previous quarter.
However, share of the biggest client went up to 5.7 per cent from 3.7 per cent a year ago. TCS added 55 new clients during the quarter taking the total number of active clients to 754. Revenues from repeat business were 96.1 per cent of total revenues.
TCS added 5,562 employees during the quarter, taking the total employee strength to 83,500. The company has made 12,372 campus offers for next financial year. Attrition rate for the quarter was 10.8 per cent, the lowest among the large IT services companies. Employee utilisation rate, excluding trainees, for the quarter was at 78.2 per cent as compared to 79.4 per cent for the previous quarter and 78.3 per cent a year ago.