Tata Consultancy Services net profit drops by 6% to Rs 5,950 crore in Q1FY18

Tata Consultancy Services (TCS) on Thursday announced its financial result for the first quarter ended on June 30, 2017. The company reported a net profit of Rs 5,950 crore, a drop of 5.8% from Rs 6,318 crore during the same period last year.

In the last quarter of FY17, the company had reported a net profit of Rs 6,622 crore. Hence, the net profit in Q1FY18 declined by 10% from Q4FY17.

The company's net income in Q1FY18 stood at Rs 5,945 crore, a decline of 5.9% on year-on-year basis and 10% on quarter-on-quarter basis. The revenue stood at Rs 29,584 crore. The operating margin during the quarter was 23.4%. 

Commenting on the performance of the company, Rajesh Gopinathan, CEO & MD, TCS, said, "We have seen steady growth across industries in Q1. Robust volumes from major markets driven by good client additions across revenue bands and accelerating Digital adoption among customers have given us the right start to the year. 

The total employee strength at the end of Q1 was 3,85,809 on consolidated basis with gross addition of 11,202 and net addition of 1,414 employees during the employees. The total attrition rate was at 12.4% including BPS, with IT attrition at only 11.6%. 

The shares of the company closed at Rs 2444.05 per piece, up 0.20% or Rs 4.95 on BSE. 

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The analysts believed that the IT sector will see their earnings impacted by sharp rise in INR, wage hikes, limited onsite talent, visa costs pressure arising from global factors. 

In case of TCS, anaysts at Motilal Oswal said, “Full-quarter impact of wage hikes and visa expenses is expected to be the major drag for profitability, apart from INR appreciation.”

ICICI Securities, Phillip Capital, Motilal Oswal and Elara Capital, believe that TCS EBIT (operating profit) margins will suffer contraction in the range of 150 basis points - 160 basis points in Q1. By end of FY17, operating margins of TCS were at 25.7%.