TCS reported better-than-expected numbers for Q1FY19 on all fronts. INR revenue grew by 6.8% qoq to Rs34,261cr, higher than the consensus estimates of Rs33,961cr. Constant currency (cc) revenue grew by 4.1% qoq and USD grew by 1.6% qoq and came in at $5,051mn. EBIT stood at Rs8,578cr, up 5.3% qoq against the consensus estimate of Rs8,269cr, EBIT margin contracted by 36bp qoq to 25%. PAT increased by 6.3% qoq to Rs7,340cr against the consensus estimates of Rs6,958cr.
Growth was driven by a rebound in BFSI and Retail verticals, together accounting for ~48% of the overall revenues. Regional markets & others posted a second consecutive quarter of better-than-company level growth
BFSI and Retail & CPG grew by 3.7% qoq cc and 3.6% qoq cc, respectively, in Q1FY19. Regional markets & others grew by 5.9% qoq cc. Retail & CPG now includes erstwhile Travel & Hospitality vertical, which could have aided in the growth
Smaller verticals like Energy & Utilities and Communication & Media grew at 5.5% qoq cc and 5.1% qoq cc, respectively, also aiding in overall growth. Energy & Utilities growth comes on a higher base (after growing at 6.9% cc in the previous quarter).
North America rebounded (on the back of strong BFSI growth) by growing at 3.7% qoq cc, potentially aided by a ramp-up in the Transamerica deal. UK and Continental Europe continued to drive overall the growth, up 8.2% qoq cc and 5.3% qoq cc, respectively
US and BFSI growth was fastest in more than two years
TCS introduced order book disclosure at US$4.9bn for Q1with US$1.6bn from BFSI
Digital Revenue grew at 9.0% qoq cc and 46% yoy, now comprising 25% of overall revenues v/s 23.8% in Q4FY18.
EBIT Margin contraction was lower than expected owing to INR depreciation and operating efficiency. Both margins & INR are back to 1QFY17 levels indicating little pricing pressure
Clients in US$100mn+ bucket increased from 38 in Q4FY18 to 40 in Q1FY19. IT service attrition declined by 10bps qoq to 10.9%
With 5,877 net additions, TCS headcount surpassed 400k.
Management reaffirmed broad-based growth in FY19 but importantly, now expects US and BFSI to grow faster than FY18.
Tata Consultancy Services Ltd ended at Rs. 1,877, down by 10.65 points or 0.56% from its previous closing of Rs. 1,887.65 on the BSE.
The scrip opened at Rs. 1,895.20 and touched a high and low of Rs. 1,900 and Rs. 1,872.60 respectively. A total of 57,36,482 (NSE+BSE) shares were traded on the counter. The stock traded below its 50 DMA.
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