TCS - TATA CONSULTANCY SERVICES - RESULTS - Q3 FY 2013-14 - NPT UP 50.3%YoY; EPS Rs.27.20;

TATA CONSULTANCY SERVICES 

(TCS)

RESULTS FOR Q3 FY 2013-14 (DEC,2013)

TCS Delivered steady performance in Q3

Revenue at Rs.21,294 crore up 1.5 % Q-o-Q; up 32.5 % Y-o-Y

· International revenues grow 3.8% in dollar terms

· Volumes up 1.8%; Realization up 74 basis points

· Hiring Target for FY14 increased further to 55,000 from 50,000

· Net Profit at Rs.5,333 Cr up 15.1% Q-o-Q; up 50.3% Y-o-Y

· Operating Profit at Rs.6,337 crore;Growth of 44.6 % Y-o-Y; 0.5% Q-o-Q

· Operating Margin at 29.8%

· Dividend per share of Rs.4

· Earnings Per Share at Rs.27.20

· Gross employee addition: 14,663

· Total headcount: 290,713

· Utilization: 84.3% (excluding trainees) & 77.5% (including trainees)

· No of $50 m+ clients increases by 2; No of $20m+clients increases by 4 

Commenting on the Q3 performance, CEO and MD, N Chandrasekaran said: “ Strong International demand for our services and discipline in execution has helped TCS maintain its momentum and post robust growth in volumes as well as realisation. Our diversified market presence and services portfolio have helped us overcome seasonal weakness and soft demand in the Indian market.” Mr Chandrasekaran added:“Based on initial discussions with our customers we believe 2014 will be a stronger year for us than 2013, as customers execute their business plans in a relatively stable environment. With Digital technologies rapidly changing the way an enterprise operates in multiple dimensions, our continuous investments positions us well to help customers reimagine their business.

Rajesh Gopinathan, CFO, said : We have been able to maintain our profitability by operating in a disciplined manner while sustaining our investments in customer -facing initiatives globally. We have also been able to significantly increase our cash generation due to efficient working capital management. Growth in Q3 was driven by industries like Life Science & Healthcare, Manufacturing, Media, Travel & Hospitality and Telecom. The company’s broad based presence across markets and services helped overcome seasonal weakness in some markets. Europe led growth , driven by the continuous investments being made in that market while North America and UK also grew during the quarter . Among growth markets, Latin America, APAC and MEA registered strong growth . India business suffered from volatility and declined sequentially. Among service lines, Business Process Services, Enterprise Solutions, Global Consulting were the leaders.

Innovation and Intellectual Property: As of December 31, 2013, the company has applied for 1535 patents including 94 applied during the quarter.  Till date, the company has been granted 102 patents.

Human Resources

The company continued to hire to support business growth. There was a total gross addition of 14,663 people (net addition of 5,463 employees ) taking the total employee strength of 290,713 employees on a consolidated basis. The utilization rate (excluding trainees) was at  84.3% and that including trainees was 77.5 %. The attrition rate (LTM) was stable at 10.9%including BPS. The attrition rate in IT was at 10.3%,while BPS attrition fell to 13.4%.

“To support business growth, we have increased our hiring target by a further 5,000 employees for the current financial year to 55,000 professionals,” said Ajoy Mukherjee, Executive vice presidentand Global Head, Human Resources.

“Our efforts to push the utilization lever is paying dividends with utilization rates including trainees rising to 77.5% and that excluding trainees at over 84%.”

Consolidated Statement of Profit and Loss for the quarter ended December 31, 2013, September 30, 2013 and December 31, 2012

(In crores of Rupees, except per share data)

INCOME                :: Q3FY 14 :: Q2 FY 14 :: Q3FY13  

a) IT & Consultancy Services :: 20,912 :: 20,533 :: 15,663

b) Manufacturing, Sale of equipment & Licences :: 382 :: 444 :: 407

Total Income :: 21,294 :: 20,977 :: 16,070 

EXPENDITURE

a) Salaries & Wages :: 7,704 :: 7,610 :: 6,142

b) Overseas business expenditure :: 3,039 :: 2,913 :: 2,194

c) Other operating expenses :: 3,864 :: 3,821 :: 3,074

Total Expenditure :: 14,607 :: 14,344 :: 11,410

Profit Before Intt, Depreciation, Taxes

& Other Income  :: 6,687 :: 6,633 :: 4,660

Interest :: 7 :: 12 :: 8

Depreciation :: 350 :: 328 :: 277

Profit Before  Taxes & Other Income :: 6,330 :: 6,293 :: 4,375

Other income (expense), net:: 683 :: (26) :: 221

Profit Before Taxes :: 7,014 :: 6,267 :: 4,596

Provision For Taxes :: 1,636 :: 1,595 :: 1,005

Profit After Taxes & Before Minority Interest :: 5,377 :: 4,672 :: 3,591

Minority Interest :: 44 :: 39 :: 41

Net Profit :: 5,333 :: 4,633 :: 3,550

Earnings per share in Rs.:: 27.20 :: 23.63 :: 18.10 

Looking at the performance from any angle, TCS performance stands out as No.1 in Indian IT Industry.

Stock price after declaration of result: Rs. 2,215.65; -Rs.135.70 (-5.77%)

This is probably due to Profit Booking by some Big players. However, the overall sentiment on TCS is clearly Bullish and will continue to remain so in future as well.

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