TCS net up 8.4% quarterly in Q2

Rajesh Gopinathan

India's largest software services company, today said its net profit (attributable to shareholders) fell 2.1 per cent to Rs 6,446 crore in the September quarter of the current fiscal.

The Tata group company had posted net profit of Rs 6,586 crore in the year-ago period. The company said its digital services or new-age technologies contributed 19.7 per cent to its total revenue in Q2, a sequential growth of 5.9 per cent and 31 per cent annually.

Revenues up 4.3% on year-on-year basis (3.2% higher on sequential basis) to Rs 305.41 billion.

Stating that BFS in Europe is doing good, Gopinathan said banks have moved beyond the fear of being disrupted by the fintech firms and are now experimenting on collaborative models, where he claimed TCS is having a foothold, and the future portends better prospects for the company. Kotak Securities have estimated the revenue growth of TCS at 2.1 per cent. Operating Margin at 25.1%, an expansion of 1.7% q-o-q. Profitability beat was driven by strong cost management both on operational factors (sub-contracting) and selling, general and administrative expenses (savings on visa/travel and other G&A).

TCS said most businesses, barring financial services and retail, grew above 9.5% in the last quarter. TCS's revenue number is actually uninspiring.

TCS' dollar revenue, which is widely tracked by analysts, rose 3.2 per cent to $4,739 million.

During the quarter, the company added six clients in each of the $ 10 million and above, $ 20 million and above, and $ 50 million and above billing segments of clients.

It added 15,868 employees in the quarter.

"In retail we're seeing a significant amount of traction".

While the signs are there for strong growth numbers due to cross-currency gains, shadows of muted results linger due to second quarter yet to witness a notable increase in spending in the retail and banking, financial services and insurance (BFSI) sectors.

N. Ganapathy Subramaniam, Chief Operating Officer & Executive Director anticipates better growth going forward.

Gopinathan said the softness in the retail business is slowly "bottoming" out. There was an assumption that fintech will disrupt the ecosystem.

Shares of TCS gained 1.9% in Mumbai trading on Thursday before the earnings were released, while the benchmark S&P BSE Sensex closed up 1.1%.



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