The country’s largest software exporter TCS on Friday reported a flat December quarter net profit at Rs 8,118 crore and also made it clear that it will not be able to notch a double-digit revenue growth in 2019-20.
The Tata group company had posted a post-tax net of Rs 8,105 crore in the year-ago period. Performance for the October-December period is better than the previous six months, but it said clients in its largest banking and finance sector are going minimalistic with their tech spends and also blamed dividend payouts for the crimped bottom line.
Its overall revenues grew by 6.7% to Rs 39,854 crore under the IFRS system in rupee terms, while the operating profit grew 4.3% to Rs 9,564 crore. For the first nine months of 2019-20, it has achieved a 7.9% revenue growth compared to the same period last fiscal.
When asked about the revenue growth for the fiscal, its managing director and chief executive Rajesh Gopinathan said it will not be able to achieve double-digit growth and blamed sluggish first half for it.
“Last year we did 11.4%. We are not going to be anywhere near that. If we do better than 8 (per cent), I will be quite happy,” he said.
The widely tracked operating margin narrowed by 0.59% to 25%, but was up 1 percentage point when compared with the preceding quarter on currency gains and operational improvements.
From a geographical and sectoral perspective, he said progress in banking, financial services and insurance, along with retail in its largest market of North America is difficult.
The company’s chief operating officer N Ganapathy Subramaniam said the company has done well in the BFSI sector and has won market share in the last four quarters.
He, however, also explained a few shifts in the marketplace which may be impacting its revenues.
“In large quarters, more for less is giving into less is more. They are all adopting AI and automation as the main lever to bring things together, to integrate tech operations. The intent is to bring things together and optimise,” he said.