TCS Q2 net up 4% at Rs 6586cr, $ rev disappoints, margins steady

Moneycontrol BureauSecond quarter performance of TCS has fallen short of street expectations except its margins which were steady. In July-September quarter, TCS has posted net profit at Rs 6586 crore up 4.3 percent from  Rs 6317 crore in last quarter. Its dollar revenue grew 0.3 percent at USD 4374 million compared to USD 4362 million on quarterly basis. In rupee terms, revenue slipped 0.1 percent at Rs 29,284 crore in Q2 against Rs 29305 crore.  Its constant currency revenue in Q1 was up sequentially by 1 percent.According to CNBC-TV18 poll, the technology major's net profit was expected to fall 0.9 percent to Rs 6260 crore in Q2FY17. Its dollar revenue was seen rising marginally to 1.8 percent to USD 4440 million while in rupee terms it was seen up 1.5 percent at Rs 29738 crore quarter-on-quarter.Digital revenues at 16.1 percent in Q2 was driven by demand for business agility, says a company statement. During Q2, growth was led by life sciences and healthcare which grew at 4.7 percent sequentially in constant currency followed by energy and utilities (up 3.6 percent), manufacturing (up 3.1 percent), travel & hospitality (up 2.3 percent) and communication and media which grew 2 percent.  From a geography perspective, Europe saw strong growth at 3.7 percent and Asia Pacific at 3.5 percent sequentially in constant currency while North America grew 1.4 percent sequentially and UK was flat. India declined by 7.6 percent sequentially and Latin America also continued to show volatility.N Chandrasekaran, company CEO and MD said that it has been an ‘unusual Q2’ for TCS as growing uncertainties in the environment is creating caution among customers and resulted in holdbacks in discretionary spending this quarter. "In additional, volatility in markets like India and Latin America also muted revenue growth. It has been a good quarter from a profitability perspective where despite multiple headwinds our disciplined approach and focus on operations has helped us deliver a strong margin performance," he added. During the quarter, its EBIT grew 3.7 percent at Rs 7617 crore versus Rs 7347 crore while  EBIT margins at 26 percent increased 90 basis points (QoQ) weighed by absence of wage hike, higher visa cost, better operational efficiency but offset by lower revenue growth and cross currency impact.

Rajesh Gopinathan, CFO said, “This has been a quarter of good financial performance with sequential improvement in profitability and strong cash generation despite multiple headwinds including global currency and market volatility through the quarter.”

A company stattement said that total employee strength at the end of Q2 was 371,519 on consolidated basis with gross addition of 22,665 . The total attrition rate (LTM) fell to 11.9 percent in IT services and was at 12.9 percent including BPS. The percentage of women in TCS rose to an all-time high of 34.3 percent while the number of nationalities was at 129.Posted by Nasrin Sultana