Tata Consultancy Services (TCS) on Thursday missed Street estimates as the Covid-19 pandemic saw the IT services giant posting a 0.95 per cent fall in net profits for the fourth quarter ended March 31, 2019.

However, its CEO Rajesh Gopinathan, who compared the current circumstances to the global financial crisis of 2008, warned that the worst is yet to come and that stability will only return in the third quarter of this financial year.

As many countries began to announce a lockdown to curb the spread of coronavirus from the second week of March, IT services that derive most of their revenues from the overseas markets were expected to report muted numbers.

TCS posted a net profit of Rs 8,049 crore during the January-March 2020 period compared with Rs 8,118 crore in the preceding three months. The country’s largest IT services company had reported a net profit of Rs 8,126 crore in the corresponding period of last year. Analysts were expecting the firm to report profits in the region of Rs 8,100-8,200 crore.

During the quarter, revenues rose to Rs 39,946 crore from Rs 39,854 crore in the October-December 2019 period and Rs 38,010 crore in the year ago period. The operating margins at 25.1 per cent, however, met estimates.

“The pandemic completely reversed the positive momentum that we had started seeing in some of our biggest verticals in the first half of the quarter. On the positive side, we had very strong deal closures during the quarter. In fact, our order book this quarter is the largest ever, from the time we started reporting the metric. Organisations across the world are realising the need for operational and systems resilience,” Gopinathan said.

Speaking to the press, Gopinathan observed that unlike the global financial crisis of 2008, the impact this time is much more broad-based and its effect will be similar in percentage terms. Hinting at a contraction of revenues during the first quarter, he said normality will only return in the third quarter and that the fourth quarter will be similar to that of the same period during 2019-20.

“The key message we want to give to stakeholders is that we are in the midst of a storm and, more importantly, the storm will get a lot worse before its gets better and our commitment to all our stakeholders is that we are confident that have a good ship,” he said.

In the near term, from the financial perspective, the impact on the revenue side of what is unfolding is comparable to the global financial crisis… Its peak impact will be felt in the next quarter (q1)..

In terms of fresh hirings, TCS said that while it has made 40,000 offers in campuses, these will be honoured. Though the company has decided not to give any salary increments this time, the TCS CEO said that there will not be any retrenchments as well.