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TCS: Excellent performance delivered

Jul 18, 2013

Tata Consultancy Services (TCS) has announced its first quarter results for financial year 2013-2014 (1QFY14). The company reported a 9.5% quarter-on-quarter (QoQ) growth in its consolidated sales and a 5.9% QoQ increase in its consolidated net profits. Here is our analysis of the results.

Performance summary
  • Net sales grew by 9.5% QoQ in 1QFY14. This was aided by a sequential volume growth of 6.1% QoQ.
  • Operating margin increased by 0.6% QoQ to 26.9% during the quarter as compared to 26.3% seen during the previous quarter (4QFY13). On an absolute basis, the operating profit increased by 12% QoQ.
  • Net profits grew by 5.9% QoQ on an absolute basis while the net profit margin dropped marginally to 21.3% from 22% witnessed in the last quarter. The increase in the operating profit (EBIT) was mitigated to some extent by the fall in 'Other Income' which declined by 40.6% QoQ. This restricted the increase in the absolute amount of Net Profit to 5.9% QoQ. The rise in net profits would have been slightly higher if not for the sequential increase in effective tax rate from 23% at the end of 4QFY13 to 24% at the end of 1QFY14.
  • TCS added a net of 10,611 (gross) employees during the quarter. The total headcount of the company was 277,586 at the end of 1QFY14.
  • Overall attrition rate including BPO dropped marginally from 10.6% at the end of 4QFY13 to 10.5% at the end of 1QFY14.
  • Utilisation (excluding trainees) remained high at 82.7%.
  • The Board of Directors declared an interim dividend of Rs 4 per share (dividend yield of 0.2%)

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