Saturday, January 28, 2012

>TCS: Tailwind pushed revenue growth higher

Exchange tailwind pushed the revenue growth higher…
Revenues during the quarter was tad above our expectation, reported at Rs. 132,040mn (CSEC est. of Rs. 131,110mn) a sequential growth of 13.5%. Volume grew 3.2% sequentially, coupled with exchange and realization aiding 8.95% and 2% respectively, which pushed the rupee revenue run rate. However the effort mix dragged to the tune of 64bps.

Margin Expansion: Currency offsetting the Rate & Productivity slump
TCS posted an EBIT of Rs. 38,618mn a sequential growth of 22.4% and the margins expanded by 213 bps on a sequential basis to 29.24% v/s 27.11% in the previous quarter. Margin expansion was largely attributed by the currency which had a positive impact of 282 bps on margin and other factors contributing positively to the tune of 45 bps; these factors largely mitigated the negative impact caused by rate & productivity mix which had a negative impact to the tune of 94 bps and offshore shift and SG&A optimization & Provision for bad debts negatively impacting 10 bps each

Effective tax rate for the quarter stood at 22.6% verses 24.3% in the previous quarter and for
the full year it is estimated to be around 23.4%. PAT grew 18.4% sequentially to Rs. 28,866mn
with a margin of 21.9% compared to 21% in the previous quarter.

Revenue by Geographies:
Barring Middle East & UK all other geographies delivered good sequential growth. In dollar terms revenues from Continental Europe grew 6.5%, Latin America grew 5.8%, Asia Pacific and Indian operation grew 3.8% and 3.6% QoQ basis respectively.

Revenue by Vertical:
Revenue growth was broad based; all verticals grew well expect telecom and energy utilities.
Retail & distribution grew by 4.1%, manufacturing, travel & hospitality and life science & healthcare grew by 2.4% on a sequential basis.

Revenue by Services:
In dollar revenue terms, infrastructure services and global consulting services grew by 13% and
10% on a sequential basis respectively. Pressure was witnessed in business intelligence and
asset leverage solutions space which de-grew 4.1% and 2.7% respectively on a QoQ basis

To read the full report: TCS