TCS keeps margins intact despite rupee's march
Highlights
TCS results, coming close after Infosys Q3 numbers, confirm that while the rupee appreciation did affect margins, a strong demand combined with effective financial management has kept the two IT bellwether companies largely unscathed.
TCS income from IT & consultancy services grew 7.9% sequentially to Rs 4,641 crore. Its net profit rose 9.6% to Rs 1,116 crore. Going ahead, its expectation of higher billing rates, up 3-5% for renewal contracts and 5-7% for new contracts, signal better times.
The weakening dollar has not had a proportionate impact on margins, reflecting better financial management. That should lessen market concerns on the impact of forex fluctuation on profits. A growing focus on Europe reduces the exposure to the North American market.
Europe���s contribution to TCS revenues increased from 23.2% a year ago to 28.6%, with America���s contribution came down from 59.5% to 56.5%. Apart from geographical de-risking, companies are also increasing exposure to sectors like telecom and financial services, reducing exposure to manufacturing.
Higher proportion of offshore revenues, larger number of big ticket clients, higher contribution from new contracts, and low attrition are some of the highlights of TCS results. These and its upbeat outlook on pricing suggest a strong performance ahead.
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