TCS Q3 growth one of its weakest in 2 years
BENGALURU: The growth of TCS in the third quarter ended in December was the slowest in at least seven quarters since its two largest segments, banking, financial services and insurance (BFSI) and retail, continued to face winds against the United States.
The company's annual revenue growth was 6.8% in constant currency. As reported, revenues grew 6.4% to $ 5.5 billion. The net profit remained stable at $ 1,100 million.
The numbers meant that it was beaten by Infosys in growth rate in all the three quarters this fiscal, after being on the leading side during most of the last three years. “We saw the sectoral trends of the first half of the year continue to play out in the third quarter,” CEO Rajesh Gopinathan said, adding that BFSI in the US and UK is a “complex picture, which is more structurally challenged”.
The growth numbers would cast doubt on the company's ability to grow in two digits in a constant currency. He had touched two digits the last fiscal year, after a couple of years of single-digit growth. It grew by 11.4% in the last fiscal year thanks to the mega agreements signed in the insurance sector. On the other hand, Infosys expects to grow 10-10.5% this fiscal year after registering 9% in the last.
TCS's BFSI business grew 5.3%, while the retailer grew 5.1%, underlining the challenges in the United States and the United Kingdom. The company said that to cover large BFSI accounts, whose budgets have not been reduced but are more focused on optimization, it is expanding its presence in smaller banks, specialized suppliers of mortgage clients, personal loans and wealth management. Payments are becoming a big business in the US. UU. & Canada and we’re looking to have more visibility there, ”said NG Subramaniam.
The retail vertical continued under pressure and TCS expects it to remain volatile in the foreseeable future. The growth was driven by life sciences and health care (17.1%) and communication and media (9.5%).