TCS Beats Expectations, Net Profit Jumps To Rs 6,446 Crore In Q2

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Under the Indian Accounting Standards (IAS), the global software major reported Rs 6,446 crore net profit for Q2, registering 8.4 sequential growth from Rs 5,945 crore last quarter but a 2.1 per cent annual decline from Rs 6,586 crore in the same period past year.

In a first cut analysis prior to TCS's earnings call with investors, Emkay Global's analyst said, "We believe that the company has delivered strong growth and profitability performance despite sustained pricing pressure and weak INR realisations". Brokerage IDBI had forecast TCS' revenue to grow 3.2% at Rs 30,534 crore, while HDFC Securities had forecast a 3.5% to 3.6% growth QoQ. Analysts polled by Reuters had expected the outsourcer to post a net profit of Rs 6,306 crore in September quarter. TCS's digital services revenue stood at 16.7 percent of the total for the previous fiscal year that ended March 31, 2017. The operating margin improved by 170 basis points to 25.1%. Customers are trying to look at how to exploit multiple technologies into a connected solution, which can be termed as an Industry 4.0, better harnessing data analytics and automation, he said.

Attrition went down further to 11.3 per cent.

TCS's profit fell 2.1% to Rs6,446 crore in Q2 from Rs6,586 crore in the year-ago.

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. The US, its largest market saw growth of 1.4 per cent, as it saw continued softness in business from banking and retail customers.

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.

TCS Chief Operating Officer N. Ganapathy Subramaniam said headwinds across sectors are slowly abating.

He said in retail, the company expects an improvement in the next few quarters, but declined to specify a timeline for BFS, the larger revenue contributor, where the commentary was limited to saying that the momentum is positive.

TCS announced an interim dividend earlier in July of Rs 7 per equity share and Re 1 each of the firm.

Gopinathan said the company is close to sealing a United States dollars 50 million deal in offering internet of things solutions.

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