ibusinesslines.com
ibusinesslines.com October 23, 2017


TCS Q2 profit falls 2% to Rs6,446 crore

13 October 2017, 04:37 | Kelvin Horton

Rajesh Gopinathan CEO & MD TCS speaking during company's second quarter results' announcement

Rajesh Gopinathan

Banking, financial services and insurance (BFSI), the bread and butter for all Indian IT service providers, grew 1.9% against 2.3% in the previous quarter on a constant currency basis, while retail fell almost 1%, from a growth of 2%, as traditional retailers hobble under the onslaught of online counterparts. The company's total employee strength at the end of Q2 stood at 3,89,213 on a consolidated basis with gross addition of 15,868 employees and net addition of 3404 employees during the quarter.

Mumbai: Tata Consultancy Services Ltd (TCS) said Thursday its net profit fell 2.1% to Rs6,446 crore in the September quarter from the year-ago period, even as its revenue rose 4.3% year-on-year to Rs30,541 crore. "Large deal wins this quarter, a good pipeline, and bottoming out of the retail sector softness positions us well", TCS CEO and MD Rajesh Gopinathan said. "By sharpening our focus on Individual components of the Digital service stock, we hove been able to bring to bear the full power of our contextual knowledge, research and innovation, and investments in location-Independent agile, automation and cloud on our customers' transformational imperatives and become a trusted partner in their Business 4.0 Journeys".

CLSA has retained a buy call on the shares of TCS, increasing the target price to Rs 2,970, from the previous target of Rs 2,880.


According to TCS, strong revenue growth was visible across verticals in the September quarter.

With the exception of retail and communication & Media industries (CMI), all industry verticals grew above the company average led by travel & hospitality (up 8 per cent QoQ), energy & utilities (up 7.2 per cent) and life sciences and health care (up 3.6 per cent). North America, which contributes the lion's share of the revenue, was up by just 1.4%, hurt by sluggish growth in the banking and retail sectors. "We expect stronger and steadier growth ahead".

Operating margin of TCS was up by 170 basis points to 25.1%, of which 50 basis points came from currency changes and the rest from operational efficiencies and savings. 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. Our investment program remains geared for growth.



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