TCS Net Up, Revenue Flat Sequentially In Second Quarter

MUMBAI: Global software major Tata Consultancy Services (TCS) on Thursday reported Rs.6,586 crore net profit for the second quarter (July-September), registering 8.8 pct year-on-year (YoY) growth over the like period year ago from Rs.6,055 crore.

Sequentially, net profit grew 4.3 pct from Rs.6,317 crore in the first quarter (April-June) of fiscal 2016-17 in rupee terms.

In a regulatory filing to the stock exchanges, the Indian IT bellwether said revenue for the quarter under review (second quarter) increased to Rs.29,284 crore from Rs.27,166 crore in same period year ago, posting 7.8 pct YoY growth but was flat (0.1 pct) sequentially from Rs.29,305 crore in first quarter in rupee terms.

In dollar terms, net income grew 6.3 pct YoY to $984 million in Q2 from $926 million in like period year ago, while gross income increased 5.3 pct to $4,374 million ($4.4 billion) from $4,156 million ($4.2 billion) in same period year ago under the International Financial Reporting Standard (IFRS).

Sequentially, net grew 4.7 pct from $940 million but revenue growth remained flat (0.3 pct) from $4,362 million in dollar terms.

"It has been an unusual Q2' for us. Growing uncertainties in the environment is creating caution among customers and resulted in holdbacks in discretionary spending this quarter," said TCS Chief Executive N. Chandrasekaran in a statement later.

Admitting that volatility in markets like India and Latin America muted revenue growth, the top executive said the second quarter was profitably good despite multiple headwinds and stronger on margin front.

Operating profit for the quarter grew 3.6 pct YoY to Rs.7,617 crore from Rs.7,354 crore year ago and 3.7 pct from Rs.7,347 crore quarter ago, while operating margin increased 94 basis points sequentially to 26 pct.

"With technology increasingly at the forefront of business, we are confident that this is temporary. We continue our tradition of investing in building IP (Intellectual Property), solutions and talent for the future," added Chandrasekaran.

The outsourcing firm added one client in $50-million revenue band and six in $20-million band.

"From a geography perspective sequentially, Europe saw strong growth at 3.7 pct, Asia-Pacific at 3.5 pct while North America grew 1.4 pct though Britain was flat," said Chief Financial Officer Rajesh Gopinathan.

Revenue declined 7.6 pct in India and was volatile in Latin America.

Life Sciences and Healthcare led revenue growth sequentially in constant currency at 4.7 pct, followed by Energy & Utilities 3.6 pct, Manufacturing 3.1 pct, Travel & Hospitality 2.3 pct and Communication & Media 2 pct.

Though the company and its subsidiaries the world over hired 22,665 people during the quarter, the net addition was 9,440 as 13, 225 techies left, taking the total to 371,519 at the end of September 30.

The attrition rate, however, declined to 11.9 pct from 12.9 pct year ago, while the percentage of women rose to an all-time high of 34.3 pct.

"We continue to hire in line with business demands and engage with our employees to help them learn and equip with new skills to succeed in a digital world," said Human Resources global head Ajoy Mukherjee.

About 180,000 techies were trained to gain expertise in digital technologies.

"We are focused on building a team of global professionals with diversity and multiple skill-sets. The process of on-boarding this year's campus trainees continues at the normal pace," added Mukherjee.

The company's blue scrip of Re 1 face value declined Rs.51.60 to Rs.2,328.50 when trading ended on the BSE from Wednesday's closing price of Rs.2,380.10.

Opening at Rs.2,355, the company's shares touched a high of Rs.2,367.85 and a low of Rs.2,323.25 during the intra-day trading sessions.

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