TCS, for the second successive quarter, has delivered a weak set of financials going by its reported numbers for the March period.

Currency played a major part as the euro weakened substantially against the dollar, affecting realisations. The rupee too held strong, worsening matters.

While addition of large-size clients has been healthy, traction across key geographies and segments has been tepid for the company.

During the quarter, TCS’ revenues fell 0.8 per cent sequentially (in dollar terms), while net profits rose 8.9 per cent. The net profit growth number does not take into account the outflow due to a one-time bonus announced by the company. The weak March numbers come after the company reported unchanged revenues in the December quarter. Volume (person months billed) growth, at 1.42 per cent, was reasonable though not strong.

Weak traction

Revenues from Continental Europe and the UK, collectively accounting for 27 per cent of the total pie, fell 5.8 per cent and 2.1 per cent, respectively, during the quarter. The North American geography fared better falling just marginally.

Among its verticals, the banking financial services and insurance (BFSI) segment fell in line with the overall company’s rate, while telecom, energy & utilities and travel witnessed revenue fall of 4-10 per cent during the March period.

Among the operation parameters, utilisation continues to be healthy at 85.4 per cent. Also, during the quarter, TCS managed to add 4 clients in the $100-million bucket and three each in the $50 million and $20 million categories.

This suggests that volume and revenue traction would improve in the coming quarters.

Looking ahead

TCS has managed to deliver a 15 per cent revenue growth in FY15, which is higher than the upper end of industry body Nasscom’s estimate for the year. Though the last couple of quarters have been tepid for the company, it should bounce back given the deal traction that the company has witnessed. TCS has indicated that it would meet or exceed Nasscom’s estimate of 12-14 per cent for the industry in FY16. The company does look set to achieve this growth, though unfavourable cross-currency movements can affect its prospects.

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