India’s largest IT services company, Tata Consultancy Services (TCS), on Monday stood up to market expectations with a 6.1% year-on-year surge in net profit for the quarter ended September 2011 at Rs 2,301 crore.
The company reported a 25.3% rise in Q2 revenues at Rs 11,633 crore, with a 6.1% rise in volumes sequentially. The results were announced after market trading ended on Monday.
“We have seen double-digit growth in retail, hi-tech, manufacturing, energy and across US, UK and Europe. We closed 10 big deals this quarter and are in the process of closing another 10,” said N Chandrasekaran, TCS’s chief executive officer.
The results came about a week after Infosys, which ranks behind TCS, reported a 10% year-on-year increase in second quarter profits, bolstered by a weak rupee in India.
However, TCS said foreign exchange fluctuations hit the company’s profit negatively by about R91 crore. “This was mainly due to our hedges to the tune of $2.5 billion maturing this quarter,” said S Mahalingam, chief financial officer.
“Given the breadth of our global operations across 45 countries, the recent unprecedented volatility in the foreign currency markets is fresh cause for concern,” he said.
Pricing had taken a marginal dip in the September quarter but will remain stable going ahead, Chandrasekaran said. “We do not expect any increase in pricing due to the volatility of markets in Europe and the US,” he added.
TCS said its operating profit margin was 27%, showing an increase of 0.89 percentage point in the quarter while its
utilisation rate – indicating how much productive work it could get out of its army of 214,770 workers, was 83.1%, not including trainees.
In all, TCS added 35 new clients in the quarter, taking its active client tally past the 1,000-mark to 1,010. The software giant’s business in the US grew by 8.8%, while registering a 10.2% increase in the UK this quarter.
Things were positive on the hiring front as well with TCS adding 20,349 new recruits in the latest quarter.
With the deal pipeline looking healthy, Chandrasekaran said, the business environment looks stable despite worrisome macro-economic factors.