BIZ-LD-RESULTS-TCS

The country's largest software

exporter TCS Thursday posted 24.1 percent growth in the

December quarter net income at Rs 8,105 crore, its highest

ever, and guided towards a healthy 2019 saying it has a

"strong" order pipeline.

The revenue of the company, which is the mainstay of

profit for the diversified Tata Group, clipped at 20.8 percent

to Rs 37,338 crore driven by a pick-up in its key North

American market, while the key segment of banking, financial

services and insurance also did well logging in a 23 percent

growth during the quarter.

"We have had good order closures this quarter, and

strong pipeline built up...a strong pipeline and a strong

order flow set us up nicely for the new calendar year,"

managing director and chief executive Rajesh Gopinathan told

reporters announcing the numbers.

Drawing on from his interactions with the clients, he

said none of them have hinted at a dip in their IT spends but

was quick to note that the picture will be clearer by the

middle of the March quarter.

Gopinathan said the total contracts closed in the

reporting quarter stood at USD 5.9 billion compared to USD 4.9

billion over a year ago and added that they were able to add

one USD 100-million-plus client during the reporting three

months period.

On the profitability front, operating margins dipped a

tad-90 bps to be precise--to 25.6 percent sequentially,

primarily on currency movements and a rise in the cost of

sub-contracted work.

Chief financial officer V Ramakrishnan said the

company still strives to get the operating profit margin up to

the desired level of 26-28 percent and added it has come in at

25.7 percent in the first nine months of FY19.

Share of the upcoming digital revenue rose to 30

percent of the overall revenue pie, which is a 50 percent

spike over the last year, he said.

Chief operating officer N Ganapthy Subramaniam chipped

in saying that the 100 percent digital revenue expectation may

come in earlier than expected.

Gopinathan said the company is well positioned to

deliver a double-digit revenue growth for the full year, but

pointed to some softness in the financials segment in

continental Europe and Britain, and also mixed fortunes being

shown by the retail sector there.

On the human resources front, TCS, already the largest

employer in the segment, added a net of 6,700 employees during

the quarter, taking the overall additions so far this fiscal

year to 23,000 and now boasts of a staff strength of nearly

4.18 lakh, with an attrition of only 11.2 percent.

Global chief of human resources Ajoy Mukherjee said

the company has hired its highest-ever number of people in the

US in 2018 where Indian software firms have for long been

facing a backlash for cost arbitrage on the labour front.

He did not give a number of hires in the US, but said

that it goes to 70 universities for hiring.

The company had cash/cash equivalent of over Rs 43,000

crore in hand at the end of the reporting period and continues

to look for acquisitions if they fit well in its strategy and

at the right price, Gopinathan said, adding, "we are active in

the deal market".

It can be noted that TCS has returned cash worth Rs

16,000 crore each to shareholders for two consecutive years as

it has not been able to successfully deploy its cash. The

company also announced an interim dividend of Rs 4 a share,

with a record date of January 18.

Gopinathan said the two small acquisitions in November

have ensured that companies get integrated fast enough.

Analysts at the BNP Paribas-owned brokerage Sharekhan

said the revenue uptick was at par with expectations, but TCS

missed the mark on margins.

The TCS counter ended the session flat at Rs 1,888.15

on the BSE, as against a 0.29 percent correction in the

benchmark. Its closest rival Infosys is set to announce its

numbers Friday.