Headwinds in the retail and financial services verticals muted the fourth-quarter earnings of TCS, India’s largest software exporter, as it reported a net profit of ₹6,608 crore for the quarter ended March 31. This is 4.2 per cent higher than the ₹6,347 crore recorded in the corresponding period last year but 2.5 per cent lower than the profit in the third quarter.
However, TCS’ newly-appointed CEO and Managing Director Rajesh Gopinathan brushed aside concerns over the banking and financial services segment, calling it a cyclical issue. “We expect BFSI to bounce back in the next quarter. There is a lot of demand from the BFSI sector for digital technologies and we have a strong deal pipeline,” he said. Analysts at Emkay Global said they were surprised by the weak revenue performance in financial services, retail and North America, especially in the context of the management’s indication of buoyant spending trends by US financial services clients.
Operating margins dipped 28 basis points to 25.7 per cent, below TCS’s stated target band of 26-28 per cent, compared to the year-ago quarter. The company blamed currency volatility for the drop.
“We were caught by surprise by the currency volatility this quarter,” Gopinathan said, playing down the impact of higher H-1B visa costs. He declined to comment on the impact of a likely executive order from the Trump administration to review the process of H-1B visas.
The Digital segment saw revenue growth of 29 per cent, helping TCS sustain growth for the full fiscal year.
On a full-year basis, the company’s revenues increased 8.6 per cent to ₹1,17,966 crore from ₹1,08,646 crore in FY16. Net profit increased 8.3 per cent to ₹26,289 crore (₹24,270 crore).
TCS hired 78,912 employees through the year, with a net addition of 33,380 people.