TCS' Q3FY18 consolidated profit at Rs 6,545 crore; constant-currency revenue grew by 6.2% yoy

Key Highlight:

• TCS Q3FY18 net profit down by  3.94% yoy but rises by 1.31% qoq
• Consolidated revenue came in at Rs 30,904 crore in Q3FY18
• BFSI segment declined by 0.42% yoy and 2.11% qoq basis and came in at Rs 11,970 crore in Q3FY18

Tata Consultancy Services (TCS) in it's third quarter ended for FY18 (Q3FY18) reported negative bottom line growth, however saw gradual increase in top-line on consolidated basis.

TCS posted consolidated net profit of Rs 6,545 crore, down by 3.94% from Rs 6,814 crore in the corresponding period of the previous year. However, the Q3FY18 net profit witnessed a sequential growth of 1.31% as against net profit of Rs 6,460 crore in the preceding quarter.

Consolidated revenue came in at Rs 30,904 crore in Q3FY18, registering growth of 3.86% year-on-year (YoY) and 1.18% quarter-on-quarter (QoQ) basis.

A Bloomberg poll of experts predicted consolidated net profit and revenue to be at Rs 6,532 crore and Rs 31,000 crore in Q3FY18.

On sector-wise performance, BFSI segment declined by 0.42% yoy and 2.11% qoq basis and came in at Rs 11,970 crore during the quarter. While manufacturing business grew by 5.07% on yearly basis to Rs 3,315 crore, retail & consumer business by 4.66% yoy to Rs 5,383 crore and communication, media & technology business rose by a whopping 13.02% yoy to Rs 5,370 crore in Q3FY18.

Rajesh Gopinathan, CEO and MD of TCS said, “We wrapped 2017 with a strong performance in December quarter, marked by the signing of industry-defining deals, robust client metrics and broad-based demand across industry verticals.”

During Q3FY18, digital revenue stood at 22.1% on constant-currency basis, rising by 39.6% yoy and 13.9% qoq. Also, three clients were added in $50 million plus revenue, 7 in $20 million+, 9 in $10 million+ and 15 in the $5 million+band.

However, IT attrition rate came down further by 0.2% qoq to 11.1% in Q3FY18, while total attrition rate (including BPS) dropped to 11.9%.

In this regard, Gopinathan said, “Progressive organisation looking to take advantage of new opportunities in the Business 4.0 era are up their digital investment, and TCS has emerged as thier preferred transformational partner. We signed our first $50M+ deal in digital this quarter, crossing an important milestone in the mainstreaming of digital technologies. “

In dollar terms, the revenue stood at $4,787 million up by 9.1% yoy and 1% on qoq basis. The constant currency revenue growth came in at 6.2 yoy and 1.3% qoq. 

Net income in dollar terms were at $1,012 million higher by 1.2% yoy and 1.1% qoq. Operating margin was at 25.2% in Q3FY8. 

Net cash from operations were at $1,026 million which 119.2% of net income, said TCS. 

On geographical basis, growth was led by Latin America up 5% qoq, continental Europe higher by 2.6% qoq and North America growing by 1.5% qoq. On yearly basis, the continental Europe grew by a whopping 22.3%, UK by 8.2% and India also performed well by 4.1%, while North America grew by 2.8% yoy. 

Total employee strength of TCS at end of Q3FY18, stood at 390,880 on consolidated basis, with gross addition of 12,534 employees and net addition of 1,667 employees.

TCS in it's financial audit, mentioned that localisation initiatives continue to progress well, with 2,929 employees recruited outside India in Q3, bringing the total to 9,908 in FY18, year to date.

TCS said,”Employee reskilling initiatives, focused on building digital competencies at scale using anywhere anytime access, are helping employees stay relevant at a time of technology change. The company continues to enjoy best in class employee retention rates.”

It needs to be noted, that the percentage of women in TCS rose further to 35.2% in Q3. The total number of nationalities represented in the workforce stood at 131.

Gopinathan added, “As lagging parts of our portfolio turn around, and areas of softness reduce, we are well placed for stronger growth."

Apart from this, TCS also informed that, the directors have declared a third interim dividen of Rs 7 per equity share of Rs 1 each of the company, and which shall be paid to the shareholders of the company whose names appear on the Register of Member. 

The third interim dividend will be paid to the equity shareholders of TCS on January 31,2018