BL Research Bureau

TCS has delivered sedate revenue and profit growth in the December quarter, driven mainly by volume growth. While revenue growth is marginally below consensus expectations, profits are marginally better.

The revenues grew 5 per cent sequentially over the September quarter to Rs 5,923 crore. EBITDA (earnings before interest, depreciation and taxes) has grown 6 per cent to Rs 1,568 crore, as has the net profit to Rs 1,327 crore. These numbers in growth terms may be disappointing compared with Infosys’ results, but could be explained partly by the base effect.

The service mix in terms of volume-driven and high margin services as a proportion of overall revenues have remained largely unchanged.

A higher onsite component and an increasing India presence probably explain slower growth this quarter, though the deal wins continue to be strong. As with Infosys, TCS’ numbers too indicate that clarity is as yet awaited on the scenario in the US in general and BFSI segment in particular.

Infosys has mentioned that some clarity may be had in February and TCS appears equally cautious in terms of outlook. The TCS stock has shed 10 per cent over the past two weeks, and the numbers may not provide any near-term catalysts.

A wait-and-watch approach on the stock over the next few months may be well advised.

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