Moneycontrol
Oct 12, 2017 06:07 PM IST | Source: Moneycontrol.com

TCS net profit beats estimates; top 10 key takeaways from Q2 results

“We continue to gain share in the fast-growing digital spend of our customers, evident in our industry-leading Digital growth in Q2,” M Gopinathan of TCS said.

TCS net profit beats estimates; top 10 key takeaways from Q2 results

Tata Consultancy Services (TCS) reported results for the quarter ended September ahead of analysts’ estimates led by robust volumes.

Ahead of the results, TCS closed 1.9 percent higher at Rs 2.548.20. It hit an intraday low of Rs 2.507.00 and a high of Rs 2.555.

We have collated a list of top ten takeaways from TCS Q2 results:

Net Profit

IT major Tata Consultancy Services' second-quarter earnings beat analysts' expectations as profit rose 8.4 percent sequentially Rs 6,446 crore. TCS reported a net profit of Rs 5,945 crore in the previous quarter and Rs 6,585 in the corresponding period of last fiscal.

Profit was estimated at Rs 6,183 crore on revenue of Rs 30,356 crore for the quarter, according to an average of estimates of analysts polled by CNBC-TV18.

Total Revenues

Total income from operations or revenues increased by 3.2 percent on a quarter on the quarter basis (QoQ) to Rs 30,541 crore compared to Rs 29,584 crore reported in the previous quarter. Revenue rose 4.3 percent on a YoY basis.

Dividend Per Share

Tata Consultancy Services informed BSE that the Board of Directors of the company at its meeting held on October 12, 2017, have declared a Second Interim Dividend of Rs 7 per Equity Share of Re. 1 each of the Company.

Further, the Company has informed that the Second Interim Dividend will be paid to the equity shareholders of the Company on November 01, 2017.

Digital Revenue

Digital revenue, which contributed 19.7 percent to total revenue, grew by 5.9 percent (in constant currency) in the quarter gone by and 31 percent on a YoY basis.

“We experienced robust volume growth in Q2, driven by good demand across multiple industry verticals. Strong, broad-based client metrics this quarter demonstrates our increasing success with newer customers,” Rajesh Gopinathan, CEO and MD TCS said in a press release.

“Large wins this quarter, a good pipeline and bottoming out of the retail sector softness positions us well,” he said.

Operating Margin

The operating margin expanded by 1.7 percent on a QoQ basis to 25.1 percent.

Segment Growth

Strong revenue growth was visible across verticals in the September quarter. With the exception of Retail and CMI, all industry verticals grew above the company average.

Travel & Hospitality grew by 8 percent QoQ, Energy & Utilities rose 7.2 percent and Life Sciences was up 3.6 percent QoQ.

“We continue to gain share in the fast-growing digital spend of our customers, evident in our industry-leading Digital growth in Q2,” M Gopinathan of TCS said.

Market across geographies

Growth was led by Europe (up 5.3 percent on QoQ), Latin America (up 5.7 percent QoQ) APAC (up 3 percent QoQ) and UK (up 2.5 percent QoQ). North America grew by 1.4 percent QoQ with continued softness in banking and retail.

Client Additions

TCS has added 1 client in USD 100 million categories; 6 clients each in USD 50 million, USD 20 million and USD 10 million bands; and 28 clients in USD 1 million categories.

Human Resource

Total employee strength at the end of Q2 stood at 3,89,213 on a consolidated basis, with gross additions of 15,868 employees and net additions of 3,404 employees during the quarter.

Attrition Rate

The company continues to enjoy best in class employee retention rate. The IT attrition rate fell by 0.3 percent in Q2 to 11.3 percent while total attrition rate fell to 12.1 percent.

“Our progressive policies and investments in upgrading employees capabilities are driving our industry-leading retention rate. Employees see immense value in the learning opportunities afforded by our Digital Learning program,” Ajoy Mukherjee, Executive Vice president and Global Head, Human Resource at TCS said.
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