Mumbai: TCS reported a marginal decline in March quarter earnings. This has led to increase in their shares in MSE by 8 per cent.
Market analysts said TCS outlined a balanced business outlook and investors are anticipating a recovery in demand conditions by the third quarter of the current financial year.
TCS on Thursday reported a marginal dip in March quarter net at Rs 8,049 crore on Thursday, but guided towards a very difficult time ahead which may even see a contraction in revenues in the first two quarters of FY21, as global clients fight the impact of the COVID-19 pandemic.
The company had posted a net profit of Rs 8,126 crore in the year-ago period.”In contrast to the cautious commentary from Wipro, TCS outlined a more balanced business outlook with hopes for a demand recovery by 3Q FY21,” according to a report by JM Financial Institutional Securities Limited.
It further added that while the near-term challenges are likely to be significant and broad-based across verticals TCS admitted to a potential QoQ decline in 1QFY21 similar to post the 2008 global financial crisis its scale should help gain market share over the medium term.
The Tata Group company promised all its 4.5 lakh employees — constituting over a tenth of the over USD 180-billion Indian IT sector — that there will be no retrenchments but they will have to do without a salary hike for the year.
The company reported a 5.1 per cent increase in revenue to Rs 39,946 crore for the reporting quarter, while the same for the full year FY20 was up 7.1 per cent to Rs 1.57 lakh crore.
The company’s Chief Executive Officer and Managing Director Rajesh Gopinathan said the impact of the COVID-19 pandemic will be just like the global financial crisis, but exuded confidence that revenues will be back to the levels of March 2020 quarter by December 2020 or March 2021 quarter, after two quarters of impact.
From a long-term perspective, the business model is intact, Gopinathan said, adding that the aspirational operating profit of 26-28 per cent will still be chased by the company once this period is over.