TCS clocks slowest start to fiscal year

livemint.com:

MUMBAI : BSE-S0003051" data-name="Tata Consultancy Services">Tata Consultancy Services (TCS) Ltd kick-started the earnings season for the technology services industry on Wednesday on a sombre note, with its quarterly dollar revenue inching up 0.43% sequentially, the slowest start to a fiscal year since it went public in 2004. A dull start in the April-June period, which along with the second quarter has historically been the strongest for technology outsourcing firms, made the TCS management concede that double-digit revenue growth in the current fiscal will be a “tall order".

TCS’s revenue totalled $7.23 billion, a 0.43% sequential rise and a 6.6% increase from the year-ago period. In constant currency terms, which does not take into account currency fluctuations, sequential growth remained unchanged, while it was 7% compared to the April-June period of last year.

Before this quarter, TCS’s slowest growth at the start of the fiscal year was in the first quarter of 2008, when the global financial crisis sent banks into turmoil, eventually hurting IT services firms like TCS, which expanded its sequential revenue by 0.5%. TCS did see a 7% sequential decline in revenue in the first quarter of 2020, but that was on account of much of the world coming to a halt because of the lockdowns triggered by the covid-19 pandemic outbreak.

At the heart of TCS’s underperformance in the first quarter was the company’s inability to generate more business from its largest customers, banks, in its largest US market. The BFSI (banking, financial services, and insurance) segment, which accounts for over 31% of its revenue, grew 3% from a year earlier in constant currency terms.