Stock Market

TCS grows at slowest pace among peers; profit flat

   Download Android App    Share in      FullScreen   CheckVideos

Mumbai | Bengaluru: Tata Consultancy Services grew the slowest among industry peers in the third quarter of this financial year hobbled by structural changes in deals involving large banking and retail customers in the US.

Chief executive officer Rajesh Gopinathan termed the muted performance as a “short-term phenomenon,” while also admitting there was little chance this year of India’s largest software exporter matching its own strong showing in fiscal 2019. “Overall growth last year (was) 11.5 per cent, we are not going to be anywhere near that.

If we do better than 8 per cent, I’ll be quite happy,” he told reporters at a press conference in Mumbai. The company’s revenues, minus currency fluctuations, grew by 0.3 per cent to $5.59 billion over the previous quarter, well below the 1 per cent growth that analysts were expecting. TCS is taking a hit on revenue growth due in large part to reduced spending by its largest customers – banks and financial services companies – in the US and UK that are responding to macro-economic pressures. Speaking to analysts, Gopinathan said while there was a dip in spending, the “technology budgets “of these large clients were not “reducing”. “There is a very strong focus on optimisation, (what) customers are doing is resetting their structural cost base rather than an absolute cost reduction,” he said. In rupee terms, TCS’ profits remained flat at Rs 8,118 crore over the third quarter last year while revenue grew 6.7 per cent to Rs 39,854 crore.

In dollar terms, revenue grew 6.4 per cent annually to $5.59 billion. The company’s stock closed 0.91 per cent down at Rs 2,218.05 on the BSE on Friday on a day the Sensex closed up 12.1 points at 41,945.37. TCS’ slower growth comes even as rivals Infosys and HCL Technologies have raised their guidance for the year.

Infosys has forecast it will report overall growth between 10-10.5 per cent in FY20 while HCL Tech now expects 16.5-17 per cent growth, boosted by acquisitions. This quarter, the Noida-based company grew 2.1 per cent sequentially while Wipro expanded 1.8 per cent and Infosys by 1 per cent in the quarter. TCS headcount also reduced headcount by 4,000 in the quarter, but the company did not offer any reason for the reduction. Analysts said TCS’ results would lead to some dampening of growth expectations in the next few quarters. “We believe these results will lead to marginal reduction in street expectations,” Brokerage Emkay Global said in a note. TCS won deals worth $6 billion dollars in the quarter, taking the total wins to $18 billion in the nine months to December. North America, the largest market for TCS and Indian IT firms, grew slow at 4.1 per cent due to issues with its large banking clients. NG Subramaniam, chief operating officer at TCS, maintained that the company was gaining market share in the banking vertical. Responding to questions on the National Company Law Appellate Tribunal (NCLAT) order reinstating former Tata Sons chairman Cyrus Mistry as a director of the company, Gopinathan said, “The Supreme Court has granted a blanket stay.

We don’t see any impact to the company from that.”




Unlimited Portal Access + Monthly Magazine - 12 issues-Publication from Jan 2021

Buy Our Merchandise (Peace Series)

 

Contribute US to Start Broadcasting


It's Voluntary! Take care of your Family, Friends and People around You First and later think about us. Its Fine if you dont wish to contribute and if you wish to contribute then think about the Homeless first and Feed them. We can survive with your wishes too :-). You can Buy our Merchandise too which are of the finest quality.

Debit/Credit/UPI

UPI/Debit/Credit

Paytm

STRIPE



SCAN and Contribute
        

Details
Category: Stock Market


21