TCS net rises 23%, BFSI buoys

Tata Consultancy Services (TCS), India’s biggest software services exporter, posted a better-than-expected 23% jump in first-quarter net profit to Rs. 7,340 crore. buoyed by robust growth at the banking, financial services and insurance (BFSI) and digital verticals.

Revenue grew almost 16% to Rs. 34,261 crore as the rupee depreciated about 5% against the U.S. dollar.

“We are starting the new fiscal year on a strong note, with the growth engine firing on all cylinders,” CEO and MD, Rajesh Gopinathan said. “Our banking vertical recovered very nicely this quarter, while other industry verticals maintained their momentum. With a good set of wins during the quarter, a robust deal pipeline and accelerating digital demand, we are positioned well for the future.”

Accelerating rates

The firm’s revenue growth accelerated in the BFSI (4.1%), Retail & CPG (12.7%) and Energy & Utilities (30.9%) verticals, the company said in a statement.

“Customers across verticals and markets are embracing our Business 4.0 thought-leadership framework and accelerating their digital transformation journeys,” Mr. Gopinathan said.

Among geographies, North America bounced back, growing more than 7%, while the U.K. (18.7%), Continental Europe (18.6%), and Asia-Pacific (10.8%) led the growth, TCS said in a statement.

The operating margin stood at 25%, the software services company said, adding that the firm’s digital revenue stood at 25%, rising 44.8% from a year earlier. Employee strength at the end of Q1 crossed the 4-lakh mark.

TCS fell 0.56% on the BSE to close at Rs. 1,877, prior to the announcement of results.

Sanjoy Sen, doctoral research scholar, Aston Business School, U.K. said, the increase in profitability “reflects how a seemingly slower but steadier approach to growth often helps in winning the race.

“This is where TCS stands out from its peers — in size, being significantly larger than the others but also in its efforts to accelerate revenues not just in one industry segment but across all,” Mr. Sen added.

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