IT major Tata Consultancy Services' second quarter (July-September) earnings beat analysts' expectations on Thursday as consolidated profit rose 8.4 percent sequentially Rs 6,446 crore, backed by robust volume growth and operational performance.
Consolidated revenue during the quarter grew by 3.2 percent to Rs 30,541 crore on sequential basis, with volume growth of also 3.2 percent, driven by all industry verticals except retail and CMI.
"We experienced robust volume growth in Q2, driven by good demand across multiple industry verticals," Rajesh Gopinathan, CEO & MD said.
Dollar revenue growth for the quarter was also 3.2 percent at USD 4,739 million compared with previous quarter, which was slightly ahead of estimates (of USD 4,731 million).
Constant currency revenue growth was 1.7 percent in Q2, driven by digital service offering.
Digital revenue, which contributed 19.7 percent to total revenue, grew by 5.9 percent (in constant currency) in the quarter gone by.
"Large deal wins in Q2, a good pipeline, and bottoming out of retail sector softness positions us well," Gopinathan said.
TCS has added 1 client in USD 100 million category; 6 clients each in USD 50 million, USD 20 million and USD 10 million bands; and 28 clients in USD 1 million category.
Travel & hospitality segment growth was 8 percent QoQ, energy & utilities 7.2 percent, and life sciences & healthcare 3.6 percent in the quarter ended September 2017.
On year-on-year basis, all industry verticals - with the exception of BFSI and retail - grew above 9.5 percent, TCS said.
Profit was estimated at Rs 6,183 crore on revenue of Rs 30,356 crore for the quarter, according to average of estimates of analysts polled by CNBC-TV18.
"Rigor and discipline in operations helped accomplish an impressive margin performance and progress along the profitability path we had outlined earlier," V Ramakrishnan, CFO said.
Consolidated earnings before interest and tax (EBIT) increased 10.8 percent sequentially to Rs 7,660 crore and margin expanded by 170 basis points to 25.1 percent in Q2, which were ahead of estimates of Rs 7,467 crore and 24.5 percent, respectively.
Operational performance was aided by lack of wage hike and visa cost, and lower sub-contracting cost during the quarter.
Research firm Emkay Global believes that company has delivered strong growth and profitability performance despite sustained pricing pressure and weak rupee realisations.
"Numbers are a beat on dollar revenue front. Margins have done well. Last quarter, they had a massive decline. In second half of FY18, there are limited margin levers," Karan Taurani, VP Research, Dolat Capital said.
Europe business registered a 5.3 percent growth on sequential basis, Latin America 5.7 percent, APAC 3 percent and UK 2.5 percent while North America grew by 1.4 percent QoQ with continued softness in banking & retail segment, the company said.
Its IT attrition rate (for last twelve months) was down further by 0.3 percent quarter-on-quarter to 11.3 percent in Q2.
The software services provider said it has total employee strength of 3.89 lakh on a consolidated basis at the end of Q2, with net addition of 3,404 employees during the quarter.
The company will pay dividend Rs 7 per share. The company has fixed record date as October 26, 2017 for dividend payment.The stock price of Tata Consultancy Services, which announced earnings after market hours, closed up 1.92 percent at Rs 2,548.55 on the BSE.