TCS Highlights Minimal H-1B Visa Dependence, Says Model Flexible To US Immigration Policy Shifts

Tata Consultancy Services Ltd. (TCS), in its analyst call on Thursday, dismissed any major impact of the hike in fee for H-1B visa applications. This comes after US President Donald Trump had last month signed a sweeping proclamation imposing a new $100,000 annual fee for H-1B visa applications. The move was expected to impact all the IT firms.

The IT major said localisation efforts were on-going and it has only 500 associates currently in the US working on H-1B visas. In addition, it clarified that its business model is adaptable to any potential changes in the US immigration policy.

Last year, Indian citizens accounted for 71% of all H-1B approvals as per official data, meaning the visa hike will especially affect Indian technology workers and their sponsoring US companies. Currently, the visas are valid for three years and can be renewed for another three years.

TCS, talking about layoffs, said that it has released 1% of its workforce at the mid and senior levels due to skills and capability mismatch. It also added that 20,000 headcount reduction is a result of voluntary and involuntary resignations. Its global workforce after quarter ended September stood at 5.93 lakh employees.

The company on Thursday announced a 5.4% fall in net profit for the second quarter, in line with estimates, while revenue advanced sequentially. The consolidated bottom-line for the quarter ended September fell to Rs 12,075 crore from Rs 12,760 crore in the preceding quarter. Bloomberg had estimated the profit at Rs 12,568 crore.

The company recorded exceptional charges of Rs 1,135 crore, incurred as restructuring expenses.

The IT major's revenue rose 3.7% sequentially to Rs 65,799 crore during the quarter under review, from Rs 63,437 crore in the April-June period. The analysts' consensus estimate tracked by Bloomberg was Rs 65,206 crore.

The company's total contract value stood at $10 billion in the three months ending September, up from $9.4 billion in the preceding quarter.

The stock settled 1.14% higher at Rs 3,061.7 apiece on the NSE, compared to a 0.54% advance in the benchmark Nifty 50. The shares, earlier during the day, fell as much as 2.57% to Rs 338.7 per share.

TCS shares have fallen 29% in the last 12 months, and 26% on a year-to-date basis.

Thirty-two out of the 51 analysts tracking TCS have a 'buy' rating on the stock, 13 recommend a 'hold' and six suggest a 'sell', according to Bloomberg data. The average of 12-month analyst price targets is Rs 3,541, which implies a potential upside of 17%.