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TCS confident of maintaining margins; end year at good level

TCS today posted a 4.3 percent growth in net profit to Rs 6586 crore. The dollar revenue grew 0.3 percent to USD 4374 million for the July-September quarter.

While the company missed profit and revenue expectations, it managed to retain its margin at 26 percent despite many headwinds.

“It was an exceptional quarter in terms of margins,” N Chandrasekaran, CEO & MD of the company told CNBC-TV18’s Reema Tendulkar. TCS reiterated its 26-28 percent margin expectation for the current fiscal.

Margin improvement confidence comes from the continuous efficiency gains and investments, says Rajesh Gopinathan, CFO & MD of the company.

Weakness in sterling and softness in macros were the main headwinds for TCS. Chandrasekaran expects the latter to go away post November. While the banking and financial services (BFSI) business grew in UK and Europe last quarter, retail business continued to soften.

TCS is ‘extremely focused on growth’ and the priority is to exit FY17 at a ‘good level’ for the company. The third and fourth quarters are likely to be much better than Q2.

There was postponement of deals worth Rs 180 crore in India, which is expected to come in next two quarters. India business will come back by next quarter, Gopinathan adds.

Ajoyendra Mukherjee, EVP & HR Head says that hiring will be lower than last quarter, but adds that retention rate has improved.

TCS is also preparing itself for various situations with upcoming elections in US, he adds.

Transcript to follow..