Tata Consultancy Services fourth-quarter profit rises 4.5 percent

Tata Consultancy Services fourth-quarter profit rises 4.5 percent

TCS, the country's biggest software services exporter, posted a higher-than-expected profit in the fourth quarter, helped by the number of contracts the firm won.

Of the 51 brokers tracking the TCS stock on Bloomberg, as many as 18 recommended a "buy" rating, 25 have a "hold" rating and 8 have a sell ratings.

On Friday, the stock raised as much as 6.55 percent to hit a lifetime high of Rs 3,399.90 apiece after the company posted 5.71 percent quarter-on-quarter and 4.48 percent year-on-year rise in consolidated net profit at Rs 6,904 crore for the March quarter.

In a regulatory filing on the BSE, the IT major said net profit for Q4 at Rs 6,925 crore was up 4.6 per cent from Rs 6,622 crore in the same period year ago and up 5.8 per cent sequentially from Rs 6,545 crore quarter ago. "The strong exit allows us to start the new fiscal on a confident note", said Rajesh Gopinathan, CEO and MD of TCS.

He said as customers move forward in their "Business 4.0" journeys, TCS is helping them leverage digital technologies to drive their growth and transformation agendas. TCS's optimism is in contrast to the circumspection displayed by rival Infosys, which weathered top management churn past year.

The company also declared total dividend of Rs 50 per share, including Rs 29 per share final dividend and Rs 21 interim dividend for the fiscal under review (FY 2018), which translates into a record 5,000 per cent per annum.

All industry verticals - with the exception of BFSI - grew above the company average, with three verticals growing in double-digits YoY.

V Ramakrishnan, Chief Financial Officer, said: "disciplined execution delivered an all-time high cash conversion in Q4".

TCS has focused on internal talent development at scale, making large investments in a digital learning platform that empowers employees to acquire new skills and stay relevant at a time of enormous technology change, it said.

"We have given low single digit wage hikes in the developed markets and high single-digit hikes in developing markets, with high performers getting increases at the higher end of those bands", added Gopinathan.

On a YoY basis, Continental Europe (+19.1 per cent), United Kingdom (+10.7 per cent) and Asia Pacific (+8.6 per cent) led the growth.

Greater adoption of digital technologies by customers resulted in several large, multi-practice integrated deal wins. The Tata Group company, which accounts for a lion's share of the group's overall profit, reported a revenue growth of 8.2 percent at Rs 32,075 crore for the said quarter, up from Rs 29,642 crore a year earlier. In Thursday's relatively strong market, TCS shares ended at Rs 3,191, up 1%.