After a below-par performance by software sector No-2 Infosys in its financials announced last week, sector leader Tata Consultancy Services (TCS) stood up to market expectations with a 31.1% surge in net profit for the quarter-ended March 2011 at Rs 2,623 crore.
A healthy 130-basis-points rise in net margins at 25.8% over the same quarter last year fuelled the rise (100 basis points is 1 percentage point).
The company saw a 31.3% rise in revenues at Rs 10,157 crore, but the 2.9% rise in volumes for the quarter were a dampener."Our margins have been excellent and we have grown in all markets across all sectors. The demand environment continues to be vibrant and deal pipeline looks robust," said TCS CEO and managing director N Chandrasekaran, while expressing hope of strong growth going forward.
Experts said that the results were in line with expectations, though "the volume growth at 2.9%, though better than Infosys, was marginally lower than our expectations," said Dipen Shah, senior vice-president, Kotak Securities.
For the financial year ended March 2011, the company's net profit grew by 29.5% at R9,068 crore and revenues by 24.3% at Rs 37,325 crore.
Salaries, which accounted for 51% of the total expenses, are likely to go up, and the average hike is likely to be 12-14% in 2011-12. "We have done well and it is only fair to share what we have got with our own people," Chandrasekaran said.