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TCS Q2 beat street estimates; 8 key points of quarterly scorecard

TCS' Consolidated revenue from operations for the quarter stood at Rs 40,135 crore, higher than the Rs 38,322 crore reported in the June quarter of FY21 and a CNBC-TV18 poll of Rs 39,330 crore

October 08, 2020 / 03:39 PM IST

India's largest IT services company, Tata Consultancy Services (TCS), on October 7 reported better-than-expected numbers as the company showed improvement on a quarter-on-quarter (QoQ) basis and beat market estimates on most parameters.

The company's profit after tax came at Rs 7,475 crore for the quarter ended September 2020 against Rs 7,008 crore in the previous quarter. A CNBC-TV18 poll had estimated it to be around Rs 6,744 crore.

Consolidated revenue from operations for the quarter stood at Rs 40,135 crore, higher than the Rs 38,322 crore reported in the June quarter of FY21 and a CNBC-TV18 poll of Rs 39,330 crore.

The company also announced the appointment of Samir Seksaria as Chief Financial Officer Designate. He would take over from Ramakrishnan V. as the Chief Financial Officer, effective May 1, 2021, the company said.

Read more: TCS Q2 profit grows 6.7% to Rs 7,475 crore QoQ

Here are ket 8 points of TCS Q2 scorecard:

The numbers: Revenue grew 4.7 percent QoQ and 3 percent YoY to Rs 40,135 crore while constant currency (CC) revenue rose 4.8 percent QoQ, but declined 3.2 percent YoY.

The company's net income came at Rs 8,433 crore, up 20.3 percent QoQ and 4.9 percent YoY. The company said its operating margin expanded 2.2 percent YoY to 26.2 percent while net margin came at 21 percent.

Provision of Rs 1,218 crore: The company's reported profit was impacted by the provision of Rs 1,218 crore in the EPIC Systems Corporation legal case.

However, adjusted profit was strongly led by revenue growth and margin expansion.

Growth drivers: "BFSI (up 6.2 percent), Retail and CPG (up 8.8 percent) and Life Sciences and Healthcare (up 6.9 percent) led the growth," TCS said.

Technology & Services grew 3.1 percent, Manufacturing 1.4 percent, while Communications & Media degrew by 2.4 percent, the company added.

TCS said all markets showed good sequential growth, with North America growing 3.6 percent, the UK at 3.8 percent and Continental Europe 6.1 percent.

As per the company, emerging markets also grew well, with India growing 20 percent, MEA 8 percent, Latin America 5.5 percent, and Asia Pacific 2.9 percent.

"A surge in future-focused discretionary investments for growth and transformation drove a strong, broad-based rebound in growth across industry verticals and geographies, led by Cloud & Security, Analytics and Cognitive Business Operations," TCS said.

Deals: The company sealed many deals in the September quarter.

As per the BSE filing, Albertsons, a leading food and drug retailer in the US, TPG Telecom, a full-service telecommunications provider in Australia, and Toyota Motors North America were some of the companies that collaborated with TCS to avail its services.

IT services attrition at an all-time low: In Q2, its IT services attrition rate (LTM) was at 8.9 percent, an all-time low, TCS said.

TCS' consolidated headcount stood at 4,53,540 as of September 30, 2020, with a diverse workforce comprising 147 nationalities, and women constituted 36.4 percent of the base, said the company.

Over 3,52,000 employees have been trained on multiple new technologies, and over 4,27,000 have been trained on Agile methods, TCS said.

Dividend: The company has announced a second interim dividend of Rs 12 per equity share of Rs 1 each of the company. The second interim dividend shall be paid on November 3, 2020.

Buyback: The company announced a share buyback proposal of Rs 16,000 crore.

The company said: "The board has approved a proposal to buy back up to 5,33,33,333 equity shares, being 1.42 percent of the total paid-up equity share capital, at Rs 3,000 per equity share for an aggregate amount not exceeding Rs 16,000 crore (excluding taxes and related expenses), on a proportionate basis under the tender offer route using the stock exchange mechanism, subject to the approval of the members by means of a special resolution through a postal ballot.

Management commentary: Rajesh Gopinathan, Chief Executive Officer and Managing Director of the company, said: "Driving accelerated business value realisation of our customers' digital investments has resulted in broad-based revenue growth. The strong order book, a very robust deal pipeline, and continued market share gains give us confidence for the future."

N Ganapathy Subramaniam, Chief Operating Officer & Executive Director, said: "Our all-round performance this quarter is a huge endorsement of the increased relevance of our services and solutions to our clients as they pivot from risk mitigation to long-term resilience powered by cloud, digital and
simplification of working methods."

Moneycontrol News
first published: Oct 7, 2020 07:42 pm