DNA Money Edit: What TCS’s Q3 numbers foretell

The earnings season is off to a flying start with software services behemoth Tata Consultancy Services (TCS) posting a 24.1% rise in the third quarter profit. Buoyed by strong gains from its banking, financial services and insurance (BFSI) segment, the IT giant posted a record net profit of Rs 8,105 crore. As per Rajesh Gopinathan, CEO and MD, the company has wrapped up 2018 with strong revenue growth of 12.1% in the October-December period, which is the highest in 14 quarters.

Despite its diversification, TCS has continued its focus on the BFSI segment. Its operating margins have been buoyant amid the rupee volatility and the higher cost of doing business in some major markets, especially the US. The company added 6,827 employees in Q3, taking the strength to 4,17,929.

Most IT companies are expected to post good third quarter numbers, according to analysts. But Infosys Ltd, which is set to announce its earnings on Friday, may report the weakest profit growth among large companies. Analysts predict that its earnings are estimated to grow in single digit, bogged down by higher employee expenses and investments in sales. Most other IT companies are banking on the large deals they have won during the fiscal for the volume growth.